Liquid capital markets, coupled with healthy banks, foster savings and investment which, in turn, drives development and growth of the private sector. However, for various reasons of legal and economic nature, many countries still have underdeveloped capital markets. The EBRD has committed to make all efforts to promote the development of local currencies and local capital markets since the launch in 2010 of the Local Currency and Capital Markets Initiative. The work on the legal framework underpinning capital markets contributes to these efforts.
While the adoption of legal and regulatory frameworks similar to those in the developed countries is not difficult, the key to developing and maintaining sound capital markets in the long term lies in strong supervision of market activities and rigorous enforcement. Supervision and enforcement require qualified and sophisticated capital market professionals in the public sector, such as market regulators and judges. This is an area where international financial institutions and bilateral donors should play a role in providing financial and technical assistance.