World’s forex reserves to build our future

The World Bank is orchestrating a move to pool a portion of the burgeoning forex reserves of several developing countries, along with capital from some major economies, to create a new global bond fund for local currency debt. Indian finance minister P Chidambaram has been approached to co-chair the advisory board for the fund. Forex reserves of emerging markets like China and India are invested, for most part, in low-yield government securities of the US, Europe and Japan. Investing a portion of these in emerging markets is likely to push up the return on these reserves, even after factoring in the currency risk implicit in investing in emerging market bonds. Confirming the development, a World Bank spokesperson told ET: "The World Bank is in the process of considering the promotion of a global investment vehicle which could help further develop the emerging markets' local currency bond markets.