The person in charge of the relevant departments of the central bank: The central bank’s purchase and sale of government bonds in the secondary market can be used as a liquidity management method and a reserve of monetary policy tools_ Oriental Fortune Network

Chinese peoplebankThe person in charge of the relevant department said in an interview with a reporter from the Financial Times that the central bank’s purchase and sale of government bonds in the secondary market can be used as a liquidity management method and a reserve of monetary policy tools. The Central Financial Work Conference proposed that “it is necessary to enrich the monetary policy toolbox and gradually increase the buying and selling of treasury bonds in the central bank’s open market operations.” China’s treasury bond market has ranked third in the world in size, and its liquidity has increased significantly. This provides the basis for the central bank to carry out treasury bonds in the secondary market. Spot bond buying and selling operations provide the possibility. Many experts have pointed out that the central bank’s open market operations can cooperate with the fiscal deficit financing, but the scale of treasury bond issuance must be relatively large enough, and the issuance rhythm must be relatively stable to effectively realize policy transmission and avoid large fluctuations in market interest rates; Moreover, in the future, the central bank Carrying out treasury bond operations will also be two-way.We should also note that when the central banks of some developed economies have exhausted their conventional monetary policy tools, they are forced to purchase government bonds on a large scale to achieve monetary policy goals. However, our country insists on implementing normal monetary policies, and the peoplebankBuying and selling Treasury bonds is completely different from the quantitative easing (QE) operations of these central banks.

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Central Bank: Long-term government bond yields will operate within a reasonable range that matches long-term economic growth expectations

In recent times, long-term government bond yields have continued to decline, with the 30-year government bond yield falling below 2.5%.Chinese peoplebankThe person in charge of the relevant department said in a recent interview with the media,Long-term government bond yields mainly reflect long-term economic growthChangheInflation expectations, but will also be disturbed by other factors such as supply and demand.

The person in charge said that the fundamentals of my country’s long-term economic growth have not changed. my country’s economy has a good foundation, strong resilience, excellent momentum, great potential, and sufficient vitality. The central bank is optimistic about the long-term economic growth prospects. However, factors such as supply and demand will also bring short-term disturbances to long-term government bond yields. In some developed economies, when economic growth expectations were good, there were cases where government bond yields deviated from long-term economic growth expectations due to periodic imbalances in market supply and demand.

Long-term bond yields supported

“The yield on long-term government bonds will generally operate within a reasonable range that matches long-term economic growth expectations.” The person in charge believes that China’s actual economic growth will remain at a reasonable level for a long time to come, and has shown a positive trend in the past year. is constantly being consolidated. Some institutional investors also believe that inflation is expected to pick up moderately from low levels in the future, and long-term government bond yields, as nominal interest rates, will increase as inflation picks up. Both aspects will support long-term bond yields. It should be noted that the development of China’s bond market has made great progress, with the total volume ranking second in the world. However, the market depth and price formation mechanism still need to be continuously improved and improved. The market operation is more complex, and long-term government bond yields are closely related to long-term economic growth. Periodic divergences are expected.

Some market participants believe that the pace of government bond supply has slowed down this year, which may be a factor leading to the short-term divergence between the two. Compared with the same period last year, the overall pace of government bond issuance in the first quarter of this year was slow. The issuance volume was nearly 240 billion yuan less than the same period last year, and the net financing amount was about 470 billion yuan less than the same period last year. In the case of a temporary imbalance between bond supply and demand, institutional investors began to focus on purchasing long-term assets in the hope of obtaining higher returns, which increased the decline in long-term bond interest rates. Overall, supply and demand in the bond market are expected to become more balanced in the future. In recent times, monetary policy has made strong countercyclical adjustments, creating a good liquidity environment for the smooth operation of the bond market. The proactive fiscal policy is relatively strong, and the scale of government bonds planned to be issued this year is also large, and the pace of issuance will accelerate in the future. The underlying logic behind the current continued decline in long-term government bond yields is the lack of “safe assets” in the market. With the issuance of ultra-long-term special government bonds in the future, the “asset shortage” situation will be alleviated, and long-term government bond yields will also rebound.

The person in charge said that in theory, long-term bonds with fixed interest rates have long durations and are sensitive to interest rate fluctuations, so investors need to pay high attention to interest rate risks. For trading investors, by increasing leverage and extending the long-term, they can gain more profits from a sharp rise in short-term prices, but they can also easily aggravate market volatility and need to bear losses from a sharp price drop. For banks,InsuranceIf allocative investors lock a large amount of funds in long-term bond assets with too low yields, and encounter a significant increase in liability-side costs, they will face a passive situation of being unable to make ends meet.Last year, Silicon Valley Bank was accused of using large amounts of deposits and short-term borrowings to purchase longer-duration U.S. Treasuries and mortgage-backed loans.securities(MBS), short-term debt and long-term investment, maturity mismatch, and then as the Federal Reserve raised interest rates and interest rates rose, bond asset prices plummeted, leading to bank insolvency and liquidity crises.

The People’s Bank of China’s buying and selling of government bonds are completely different from QE operations

The person in charge also said that the central bank’s purchase and sale of government bonds in the secondary market can be used as a liquidity management method and monetary policy tool reserve. The Central Financial Work Conference proposed that “it is necessary to enrich the monetary policy toolbox and gradually increase the buying and selling of treasury bonds in the central bank’s open market operations.” China’s treasury bond market has ranked third in the world in size, and its liquidity has increased significantly. This provides the basis for the central bank to carry out treasury bonds in the secondary market. Spot bond buying and selling operations provide the possibility. Many experts have pointed out that the central bank’s open market operations can cooperate with the fiscal deficit financing, but the scale of treasury bond issuance must be relatively large enough, and the issuance rhythm must be relatively stable to effectively realize policy transmission and avoid large fluctuations in market interest rates; Moreover, in the future, the central bank Carrying out treasury bond operations will also be two-way. We should also note that when the central banks of some developed economies have exhausted their conventional monetary policy tools, they are forced to purchase treasury bonds on a large scale to achieve monetary policy goals. However, our country insists on implementing normal monetary policies. The People’s Bank of China buys and sells treasury bonds in conjunction with these The central bank’s quantitative easing (QE) operations are completely different.

Previously, industry experts said that historically, my country’s central bank tried to buy and sell treasury bonds in 1997, but was soon stopped due to insufficient market depth and breadth. Over the years, my country’s treasury bond market has experienced sustained and substantial development, providing conditions for the central bank to carry out treasury bond spot buying and selling operations.

“Coordinated fiscal and financial policies are a powerful driving force for improving the quality of financial supply.” The Theoretical Learning Center Group of the Party Leadership Group of the Ministry of Finance recently stated that in terms of meso-level mechanisms, it is necessary to strengthen the coordination and cooperation of fiscal and monetary policies and financial reforms, and improve the base money supply and The money supply control mechanism supports the gradual increase in the purchase and sale of government bonds in the central bank’s open market operations, enriches the monetary policy toolbox, and studies the expansion of the variety and scale of government bond over-the-counter sales. Improve the long-term mechanism for overseas sovereign bond issuance. Deepen the market-oriented reform of interest rates, smooth the interest rate transmission mechanism, better leverage the role of the government bond yield curve as a pricing benchmark, and improve the efficiency of capital allocation.

(Source of article: Financial Associated Press)

Source of article: Financial Associated Press

Original title: Head of relevant departments of the central bank: The central bank’s purchase and sale of treasury bonds in the secondary market can be used as a liquidity management method and monetary policy tool reserve