In most developed countries, open market operation is the main monetary policy tool for the central bank to control the base currency and regulate market liquidity. The central bank conducts securities and foreign exchange transactions with designated dealers to achieve the purpose of monetary policy regulation. China's open market operation includes RMB operation and foreign exchange operation. The foreign exchange open market operation 1994 was launched in March, and the RMB open market operation 1998 resumed trading on May 26th, with a gradually expanding scale. Since 1999, open market operation has become an important tool for the daily operation of monetary policy of the People's Bank of China, which has played an active role in regulating the money supply, regulating the liquidity level of commercial banks and guiding the interest rate trend in the money market.

From 1998, the People's Bank of China began to establish a first-class dealer system for open market business, and selected a number of commercial banks that can undertake large-value bond transactions as trading objects for open market business. At present, the primary dealers of open market business include 40 commercial banks. These dealers can use government bonds and policy financial bonds as trading tools to conduct open market business with the People's Bank of China. In terms of transaction types, China People's Bank's open market bond transactions mainly include repurchase transactions, spot bond transactions and issuance of central bank bills. Among them, repurchase transactions are divided into positive repurchase and reverse repurchase. Repurchase refers to the trading behavior that the People's Bank of China sells securities to primary dealers and agrees to repurchase securities on a specific date in the future. Repurchase refers to the operation of the central bank to recover liquidity from the market, and it refers to the operation of the central bank to put liquidity into the market when it expires. Reverse repurchase means that the People's Bank of China buys securities from primary dealers and agrees to sell the securities to primary dealers on a specific date in the future. Reverse repurchase refers to the operation of the central bank to put liquidity into the market, and it refers to the operation of the central bank to recover liquidity from the market when it expires. There are two kinds of spot trading: spot buyout and spot selling. The former is that the central bank directly buys bonds from the secondary market and puts in the base currency at one time; The latter is that the central bank directly sells bonds and withdraws the base currency at one time. Central bank bills are short-term bonds issued by the People's Bank of China. By issuing central bank bills, the central bank can withdraw the base currency and put it back when the central bank bills expire.