the central bank launches treasury bond trading to help stabilize growth and prevent risks
2024-09-20
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original title: net purchase of 100 billion yuan in august——(lead)
the central bank launches treasury bond trading to help stabilize growth and prevent risks (theme)
yao jin, reporter of economic daily
the people's bank of china recently issued the treasury bond trading business announcement [2024] no. 1, stating that in order to implement the relevant requirements of the central financial work conference, the people's bank of china carried out open market treasury bond trading operations in august 2024, buying short-term treasury bonds and selling long-term treasury bonds from some open market primary dealers. the net purchase of bonds for the whole month had a face value of 100 billion yuan.
"the central bank's launch of bond trading marks the official entry of new monetary policy tools." zhou maohua, a macroeconomic researcher at the financial markets department of everbright bank, said that the market has already expected the central bank to buy and sell bonds. the central bank's monetary policy implementation report has clearly stated that it plans to introduce bond trading in open market operations to enrich the means of issuing base currency.
zhou maohua said that with the development of the bond market, the bond market has a great impact on my country's market liquidity. the central bank has created treasury bond trading tools to adapt to changes in the liquidity market structure, enrich monetary policy tools, and improve the accuracy and effectiveness of the central bank's base money and market liquidity regulation. in addition, the central bank's treasury bond trading business is two-way. the central bank's participation in treasury bond market transactions will help to smooth short-term market funding fluctuations, enhance the ability to regulate base money supply, and improve bond market liquidity and pricing efficiency.
"in the absence of a reserve requirement ratio cut, using the central bank's purchase and sale of treasury bonds as an important monetary policy tool has positive significance and sends a clear signal that monetary policy will increase its support for stabilizing growth and expanding domestic demand," said dong ximiao, chief researcher at china united network communications.
mingming, chief economist of citic securities, said that buying short-term and selling long-term government bonds will help maintain an upward sloping yield curve, stabilize the operation of financial markets and prevent financial risks.
wen bin, chief economist of minsheng bank, said that in august, the central bank bought short and sold long government bonds, and it was a net purchase. on the one hand, it reflects the central bank's intention to regulate the government bond yield curve, maintain a reasonable term spread and long-term interest rate level of government bond interest rates, so as to avoid excessive market speculation and potential accumulation of financial risks. on the other hand, the central bank's net purchase of government bonds actually released base money into the market, increased the means of releasing liquidity, maintained a suitable monetary environment, and reflected the further evolution of the central bank's monetary policy framework.
experts believe that the central bank's gradual increase in the purchase and sale of treasury bonds in open market operations is also a reflection of the coordination between monetary and fiscal policies. in cases of market overshoot, the central bank's purchase and sale of treasury bonds can become a correction mechanism, which will more directly affect market supply and demand and stabilize market expectations.
it should be noted that incorporating treasury bond trading into the monetary policy toolbox does not mean quantitative easing (qe). when the conventional monetary policy tools of some developed economies are exhausted, the central banks are forced to buy treasury bonds on a large scale to achieve monetary policy goals. however, my country insists on implementing normal monetary policy. the purchase and sale of treasury bonds by the central bank of my country is completely different from the quantitative easing operations of other central banks.
"buying and selling government bonds is essentially just a tool for the central bank to adjust its balance sheet. the central bank will choose appropriate operating methods to achieve monetary policy goals based on the specific conditions of the macro-economy and financial markets," said wen bin.
dong ximiao said that from international experience, the central banks of developed economies often have their own stage backgrounds for quantitative easing. generally, under the impact of a crisis, loose monetary policy is continuously implemented until it faces the constraint of the zero interest rate lower limit, but the liquidity of the treasury bond market is still poor, there is a lack of buying and strong selling power, and the price channel transmission is not smooth. at this time, the central bank usually resorts to non-traditional monetary policies, including quantitative easing (central bank purchases treasury bonds, commercial bills, etc. on a large scale).
the situation in my country is completely different from the above background. dong ximiao believes that my country's economy has maintained a positive recovery trend, financial institutions have remained healthy and stable, and are not facing the constraint of the zero interest rate lower limit. the subscription and investment enthusiasm in the treasury bond market is quite high, and there are signs of "asset shortage" to a certain extent. there is no rationality and necessity to launch quantitative easing, and there is no need to equate the routine operation of treasury bond trading with quantitative easing.
source: economic daily
