Lu Qingjie

Abstract: From the perspective of application, the base currency consists of cash in circulation, cash on hand of commercial banks and reserves of commercial banks in the central bank, all of which are components of central bank liabilities. The central bank uses monetary policy tools to control its own balance sheet, which also controls the base currency, thus affecting the money supply. Compared with developed market economy countries, there are still the following problems in the use of monetary policy tools in China: credit policy is still administrative; Reserve ratio affects the effectiveness of monetary policy tools; Open market business has some limitations; The exchange rate system affects the use of foreign exchange operating tools; Non-market interest rate affects the effect of interest rate adjustment tools.

Key words: monetary policy, balance sheet, credit policy, reserve, open market business, exchange rate system, interest rate marketization.

I. Monetary Policy Instruments and the Balance Sheet of the Central Bank

From the aspect of application, the base currency consists of cash in circulation, cash on hand of commercial banks and reserves of commercial banks in the central bank, which are all components of the central bank's liabilities. The central bank uses monetary policy tools to control its own balance sheet, which also controls the base currency, thus affecting the money supply. Table 1 is the simplified balance sheet of the central bank, and the amount of base money is expressed by the asset side as follows:

B=NPA+NPG+L+OIN ( 1)

The debtor expresses the amount of the base currency as:

B=C+R (2)

According to formula (2), the base currency is equal to the cash in circulation and the reserve of commercial banks in the central bank. According to the formula (1), from the source of the base currency, the intervention of the foreign exchange market, the borrowing of the government and the borrowing of domestic commercial banks affect the control of the base currency by the central bank. First, if the central bank buys foreign currency from domestic credit institutions, the local currency of the accounts opened by commercial banks with the central bank will increase accordingly, and the net foreign assets (NFA) of the central bank will rise. This foreign exchange market intervention occurs when the central bank buys foreign currency to support the value of the local currency. If foreign currency is sold in the foreign exchange market to avoid the devaluation of the local currency, the net foreign exchange position of the central bank will decline. Secondly, the increase of the central bank's loan to the government will increase its net position (NPC) to the government. However, as long as the corresponding loan still exists in its account in the central bank, the net position will remain unchanged; Once the government uses these loans to pay private sector economic agents who open accounts in commercial banks, the base currency will increase. If the central bank buys government bonds in the open market operation, it can also increase the base currency in this way. Third, the central bank's loans to commercial banks can be increased through credit facilities or auction procedures (such as securities repurchase agreements).

Under the condition of market economy, the main tools for the central bank to control the base currency are: refinancing tools, including refinancing and rediscounting; Open market operations, including one-time transactions or repurchase agreements in the secondary market; Open market operation, that is, the central bank sells government or central bank securities in the primary market, which is similar to open market operation; One-off non-sterilisation operation, foreign exchange swap and reserve requirements of the central bank in the foreign exchange market. Table 2 summarizes how monetary policy tools affect the balance sheet of the central bank:

Table 1: summary table of central bank's balance sheet

(1) refinancing instruments

Through the refinancing tool, the central bank injected funds into the banking system by providing credit (refinancing and rediscounting) to commercial banks, which increased the deposit creditor's rights of the central bank to money banks (item L in table 1) and increased the working capital account balance of commercial banks in the central bank. If commercial banks accept part of the central bank's credit in cash, the cash on hand held by commercial banks will also increase, which will expand domestic net assets, bank reserves and base currency. On the contrary, repaying existing loans will reduce the reserves of commercial banks, reduce the central bank's claims on them and shrink the base currency.

(2) Open market operation and open market operation.

Buying in the open market (one-time buyout or repurchase) has increased bank reserves, domestic net assets and base currency; Open market selling (one-time selling transaction or reverse repurchase) reduces bank reserves, domestic net assets and base currency. The difference between open market operation and open market operation is that the former occurs in the primary market and the latter occurs in the secondary market. Open market operations can be carried out by issuing securities by the government or the central bank. Positive net issuance of bills (that is, the value of newly issued bills is higher than the value of bills due) extracts the liquidity of commercial banks, while negative net issuance injects liquidity into commercial banks. Selling central bank bills increases central bank liabilities; When selling government bills, the government's deposits in the central bank increased. Both of these operations lead to the decrease of the balance of working capital account of commercial banks, which leads to the decline of domestic net assets and base currency.

(3) Statutory reserve ratio

Adjusting the reserve ratio is not an effective means of liquidity management. Under the condition that commercial banks do not hold large-scale excess reserves, raising the statutory reserve ratio will reduce the liquidity of commercial banks' funds and lead to an increase in interest rates, but the impact on the base currency is uncertain. In the short term, although there is a high reserve ratio, the base currency may expand, but it is impossible for banks to adjust their balance sheets quickly. In order to meet the higher reserve requirements, the central bank will have to provide the necessary liquidity to the banking system and increase the base currency in the short term.

(4) Foreign exchange business

Through the one-off operation of the banking system in the foreign exchange market, the central bank affects the assets and liabilities of the central bank's balance sheet and changes the level of bank reserves and base currency. The purchase of foreign exchange will have an expansion effect by increasing the central bank's creditor's rights to non-residents and bank reserves, and the base currency will rise; By reducing the central bank's creditor's rights to non-residents and bank reserves, the sale of foreign exchange has a contraction effect, and the base currency has declined. In these two businesses, domestic net assets remain unchanged. If permitted by law, the central bank generally holds most of its foreign exchange reserves in the form of securities.

The ability of the central bank to control the base currency according to the monetary policy objectives depends on the independence of the central bank and the corresponding institutional arrangements: (1) the autonomy of the central bank in the foreign exchange market. Under the fixed exchange rate system, the autonomy of the central bank to intervene in the foreign exchange market is limited. However, if the central bank intervenes in the foreign exchange market on a large scale to maintain a fixed exchange rate, as long as it can offset the expansion of the foreign exchange market by reducing loans to commercial banks and make NPA =-L, it is still possible for the central bank to effectively control the base currency. (2) The central bank is independent of the central government. The central bank does not need to be forced to provide the final financing for the central government's fiscal deficit by issuing money. (3) The central bank must be able to control the loans to commercial banks.

Table 2: Summary of changes in the central bank's balance sheet under different monetary instruments

Second, the effectiveness analysis of China's monetary policy tools

Compared with developed market economy countries, there are still the following problems in the use of monetary policy tools in China: credit policy is still administrative; Reserve ratio affects the effectiveness of monetary policy tools; Open market business has some limitations; The exchange rate system affects the use of foreign exchange operating tools; Non-market interest rate affects the effect of interest rate adjustment tools.

The credit policy is still administrative.

Before 1990, China's financing channel was a single indirect financing channel, and the monetary policy transmission mechanism was only transmitted through the bank credit channel, not a typical credit channel transmission mechanism. The central bank determines the loan scale plan according to the indicators of economic development and price control, and implements monetary policy according to the loan scale plan. The loan scale plan is not only a monetary policy tool, but also an operational goal and an intermediary goal. This conduction mechanism is simple and the process is short. 199 1 year later, the operation of the securities market opened up direct financing channels, and the transmission mechanism of monetary policy also changed. However, China's financial market is underdeveloped. According to the statistics of the Survey and Statistics Department of the People's Bank of China, loans are still the main financing channel for non-financial institutions in China. In 2005 and the first half of 2006, the loan financing of domestic non-financial institutions accounted for 86.8% and 87.8% of the total financing (see Table 3), so the transmission channel of China's monetary policy is still mainly credit channel. The difference is that after 1998 canceled the loan scale control, the original non-market credit transmission mechanism became a market-oriented credit transmission mechanism.

Table 3: Summary of financing of domestic non-financial institutions in the first half of 2006

The credit policies of central banks in developed countries are generally only short-term window guidance, and do not undertake multiple tasks such as structural adjustment and credit innovation. China's credit policy should not only be guided by the window, but also regulate and guide the credit innovation of commercial banks. China's credit policy has played an important role in regulating the real estate industry, guiding commercial banks, supporting the development of small and medium-sized enterprises, adjusting the economic structure and supporting the pilot reform of rural credit cooperatives. Therefore, the credit policy is still strongly planned, and it is not a real market-oriented monetary policy tool. In addition, the non-performing loans of commercial banks have affected the application of credit policy, and the reform of property rights system of commercial banks is still an important factor affecting the effectiveness of credit policy tools.

(2) The high reserve interest rate has affected the reserve ratio and the effective use of open market business tools.

The People's Bank of China pays higher interest on the reserves of commercial banks, which affects the effective implementation of monetary policy. The operation of interest rate marketization needs a reasonable interest rate structure framework. China's central bank's excess reserve interest rate and reserve interest rate are two very special interest rates in China, and most countries in the world do not pay reserve interest, let alone excess reserve. The payment system of China's central bank is not developed enough, and the transaction scale of the interbank lending market has been very small. The statutory reserve of China Commercial Bank is paid by its head office in the local people's bank, and the branches (branches) of commercial banks need to reserve part of the excess reserve to ensure the large payment in the local area, so commercial banks generally maintain a high level of excess reserve. In order to reduce the financial burden of commercial banks, the People's Bank of China still pays interest on the excess reserves. The high interest rate of excess reserves makes commercial banks lack the motivation to reduce excess reserves, reduces the demand for interbank lending, especially overnight lending, and makes it impossible for the central bank to effectively mobilize commercial banks to make full use of their funds, which hinders the process of the central bank's transformation from direct regulation to indirect regulation of the macro economy. In addition, paying higher interest to the reserves of commercial banks has affected the efficiency of the central bank's monetary regulation and monetary policy: first, paying interest to the reserve deposits of commercial banks constitutes one of the channels for the central bank to increase the base currency; Secondly, the reserve interest rate reduces the transmission efficiency of the central bank's open market operation, especially when the market interest rate drops, and the arbitrage behavior of financial institutions makes the reserve interest rate constitute the lower limit of the money market interest rate, thus limiting the role of the central bank in guiding the money market interest rate through open market operation. Raising interest on reserve deposits is a necessary compensation system for commercial banks under the planned economy system. However, after the cancellation of credit scale control and the reduction of the statutory deposit reserve ratio to a very low level, the institutional basis for commercial banks to pay the statutory deposit reserve and excess reserve interest no longer exists.

This paper analyzes the relationship between the interest rate paid by the central bank for commercial bank deposits (reserves and excess reserves) and interbank lending rate, and the relationship between the interest rate charged by the central bank for commercial bank refinancing and interbank lending rate, thus explaining the rationality of the interest rate structure of the central bank for commercial banks. Theoretically, as the lender of last resort, the interest rate of reserve and excess reserve deposits of commercial banks should be lower than the interbank lending rate; The rediscount and refinancing rates should be higher than the interbank lending rate. Therefore, we select the monthly weighted average interest rate data of interbank lending from 1996 to 1 to September 2005, as well as the reserve interest rate, excess reserve interest rate, rediscount interest rate and 20-day refinancing interest rate in the same period for analysis (the data selected here are all from the website of China People's Bank () and China Economic Statistics Database (). As can be seen from Figure 1, for the rediscount rate, the reasonable interest rate structure began at 5438+0 in September, 2006, and the weighted average interest rate of interbank lending runs in the channel composed of rediscount rate and reserve (excess reserve) deposit rate, that is, commercial banks make high-cost financing from the interbank market to make up reserves; Similarly, if you raise money from the interbank market and deposit it in the central bank, the income will be negative. From April 1998 to August 5438+0, 2006, the weighted average interest rate of interbank lending was higher than the rediscount rate, that is, for commercial banks, if there is a funding gap, the more favorable choice is to rediscount from the central bank instead of financing from the interbank lending market. This distorted interest rate structure limits the effective operation of the interbank lending market. At the same time, as can be seen from the figure 1, on June 65438+February 2 1, 2003, the People's Bank of China reformed the interest rate system of reserve deposits, and adopted the method of "one household with two interest rates" for statutory reserve deposits and excess reserve deposits of financial institutions, and the interest rate of statutory reserve deposits remained unchanged at 1.89%. The interest rate of excess reserve deposits was lowered from 1.89% to 1.62%, and was lowered to 0.99% again on March 7, 2005, and the weighted average interest rate of interbank lending was also lowered accordingly. Since April 2005, it has been below the level of reserve deposits, but above the level of excess reserve deposits. The interest rate of excess reserve deposits constitutes the lower limit of the weighted average interest rate of interbank lending and the bottom line of China interest rate. Therefore, in other words, the Bank of China pays interest on reserve deposits, which reduces the operating space of open market business.

Figure 1: interest rate structure of money market Figure A

Next, figure 2 is analyzed. The refinancing interest rate started to operate in a reasonable interest rate structure range from June 65438 to June 0998. Prior to this, the weighted average interest rate of interbank lending was higher than the 20-day refinancing rate, that is, if commercial banks were short of funds, they would give priority to applying for refinancing from the central bank instead of financing from the interbank lending market. Similarly, this distorted interest rate structure limits the development of the interbank lending market. In addition, from Figure 1 and Figure 2, it can be found that the interest rate channel composed of refinancing rate, rediscount rate and (excess) reserve deposit rate is wider and wider, which shows that with the advancement of interest rate marketization, the central bank's ability to manage interest rate structure is further enhanced, and a reasonable interest rate structure is gradually formed.

Figure 2: Interest rate structure of money market Figure B

As the People's Bank of China pays interest on the excess reserves of commercial banks, the interest rate on excess reserves before March 2005 was 1.62%, while the interest rate on deposits of commercial banks was only 0.72%. The storage cost of commercial banks is lower than the capital profit, and commercial banks are driven by the interests of increasing excess reserves, resulting in a high excess reserve ratio. Paying interest on the reserve has affected the effective transmission of China's monetary policy. After the interest rate of excess reserve was adjusted to 0.99% in March 2005, a large amount of funds turned around and entered the money market, which led to a continuous decline in the interest rate in the interbank market. A large amount of funds leave the bank media and "idle" outside the bank. At present, the excess deposit reserve ratio of China's commercial banks is still as high as 4% (see Table 4), and the excess reserve plays a buffer role in the regulation of monetary policy. When the central bank implements a tight monetary policy by raising the statutory reserve ratio or opening the market, commercial banks can offset the policy impact by reducing the excess reserve ratio.

Table 4: Excess Reserve Ratio of China Banking Industry (%)

Therefore, the payment of reserve interest not only reduces the operating effect of open market business from the perspective of interest rate structure, but also leads to the preference of commercial banks to maintain a high excess reserve ratio, thus reducing the effectiveness of reserve ratio and open market business as a monetary policy tool.

(c) There are some restrictions on the use of open market business tools.

If the open market business is completed through national debt, then the open market business is connected with the national fiscal policy and monetary policy. Central banks in developed countries generally intervene in the secondary market of national debt to minimize the interference between currency control and debt management. However, under the condition of underdeveloped financial markets, it is difficult for the central bank to carry out real open market operations. As can be seen from Figure 3, in recent years, in the asset structure of China's central bank, foreign exchange is the main way to invest in the base currency; The proportion of central bank's creditor's rights to the government is still very low. By the end of 2005, the proportion was only 3. 13%. The shortage of national debt as an open market business tool is still the bottleneck restricting the central bank to carry out open market business. Compared with the supply mode of China's base money, the American base money is mainly put into open market business, and the creditor's rights to the central government are the main assets of its central bank's balance sheet.

Figure 3: Balance Sheet of China Central Government.

In order to avoid the open market business of national debt, the central bank sometimes prefers to use central bank bills to avoid this situation. In 2005, the People's Bank of China mainly operated in the open market through central bank bills, and issued 125 central bank bills with a face value of 2,788.2 billion yuan. At the end of the year, the balance of central bank bills was 2,066.2 billion yuan. In 2004, * * * issued 105 central bank bills, with a total issuance of1507.2 billion yuan. At the end of the year, the balance of central bank bills was 974.2 billion yuan. The use of bills gives the central bank greater autonomy and freedom to control the money supply, but if it is issued in large quantities, it will put pressure on the central bank to pay the cost, and the monetary resources occupied by central bank bills will affect the development of other financial instruments in the money market and capital market.

The use of monetary policy tools has changed from direct to indirect, which makes the correlation between the central bank and the financial sector stronger. Lack of coordination between the two departments will undermine the operational mechanism of the central bank and affect the effectiveness of the central bank's monetary policy operation. Therefore, the coordination between the two departments is particularly important in choosing the tools to implement the central bank's open market operation, reducing the interference between money and debt management and promoting the development of financial markets.

(D) The exchange rate system has affected the effect of foreign exchange operating tools.

From 65438 to 0994, China reformed its foreign exchange management system. Although the RMB exchange rate is nominally a managed floating exchange rate system, it is actually a fixed exchange rate pegged to the US dollar. With the gradual improvement of financial globalization and integration, the openness of domestic financial market has been gradually strengthened, and a large number of legal and illegal capital have poured in. The rising proportion of foreign exchange reserves in the central bank's assets has affected the central bank's ability to control the money supply. By the end of June 2006, the balance of China's foreign exchange reserves was 9411500 million US dollars, ranking first in the world.

The surge in foreign exchange reserves has affected the independence of China's monetary policy. The increase of foreign exchange reserves will lead to the increase of money supply and increase inflationary pressure. In order to alleviate the inflationary pressure caused by the growth of foreign exchange reserves, the central bank has to intensify the sterilization operation to prevent the increase of money supply, but it will also cause credit contraction, thus increasing the pressure of RMB interest rate, and then forcing the central bank to buy foreign exchange reserves and eventually increase the money supply, which will greatly reduce the central bank's efforts to change the money supply. In 2005, the situation of "loose money and tight money" appeared in China, and the effectiveness of monetary policy faced severe challenges. Secondly, the large-scale increase of foreign exchange reserves makes it more difficult for the central bank to use monetary policy tools to regulate; Finally, a large amount of "hot money" enters the real estate market, which directly affects the effect of our government's regulation of the real estate industry, that is, the effect of credit policy.

At present, the reform of exchange rate formation mechanism has taken a historic step. On the evening of July 2, 2005, the People's Bank of China announced that from now on, China will implement a managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies. At the same time, the RMB appreciated by 2% against the US dollar; Reference to a basket of currencies can make the influence of speculative capital on RMB exchange rate lose compliance, thus giving China the initiative in exchange rate management. The RMB exchange rate is no longer pegged to a single dollar, forming a more flexible RMB exchange rate mechanism. On October 3, 2006, the reform of RMB exchange rate system took another big step forward. The People's Bank of China announced the introduction of the inquiry trading mode (OTC mode) and the market maker system in the inter-bank spot foreign exchange market from June 4th, 2006. The inquiry method is that China Foreign Exchange Trading Center makes an inquiry to all market makers in the inter-bank foreign exchange market before the daily opening of the inter-bank foreign exchange market, and takes the quotations of all market makers as the calculation sample of the central parity of RMB against the US dollar. After excluding the highest and lowest quotations, the remaining market makers' quotations are weighted and averaged to get the central parity of RMB against the US dollar on that day, and the weight is determined by China Foreign Exchange Trading Center according to the trading volume and quotations of the quotations in the inter-bank foreign exchange market.

The reform of exchange rate system makes the RMB exchange rate more flexible and enhances the effectiveness of China's monetary policy. First, the reform of exchange rate system has expanded the fluctuation range of China's exchange rate, which means that China has increased the independence of monetary policy by giving up the goal of exchange rate stability under the background of gradual improvement of free capital flow. Second, after the reform of the exchange rate system, the central parity of RMB exchange rate is formed according to the weighted average of market prices, which is a floating exchange rate system; At the same time, the weight is determined by China Foreign Exchange Trading Center, and the floating range is specified. It is a managed exchange rate system, which gives the central bank a certain space for foreign exchange intervention and control, and gets rid of the dilemma of buying (selling) foreign exchange in the foreign exchange market to stabilize the exchange rate, thus passively increasing (decreasing) the base currency and improving the initiative of China's monetary policy. Third, under the floating exchange rate system, the impact of interest rate adjustment on the balance of payments can be reversed by exchange rate fluctuations, thus increasing the effectiveness of interest rate policy.

(E) The process of interest rate marketization has affected the effect of interest rate adjustment tools.

Interest rate marketization is a systematic project, which means that under the guidance of the government, the interest rate level is determined by the behavior of market participants and the supply and demand of market funds. On129 October, 2004, 10, the central bank announced the full liberalization of the loan interest rate ceiling of financial institutions (excluding urban and rural credit cooperatives). Allowing the RMB deposit interest rate of financial institutions to fluctuate within the range of not exceeding the benchmark interest rate of all grades of deposits indicates that China's interest rate marketization has achieved the phased goal of "controlling the lower limit of loan interest rate and the upper limit of deposit interest rate". It took about five years for the United States to complete the interest rate marketization reform from 1982 to 1986. The process of interest rate marketization in the United States is actually the process of gradually canceling the "Q control" of the deposit interest rate ceiling. At present, China's deposit interest rate still has an upper limit and loan interest rate has a lower limit. The non-market interest rate mechanism restricts the effect of interest rate adjustment tools. To realize the complete interest rate marketization, it is necessary to improve the pricing ability of commercial banks, improve the financial market and develop the interest rate derivatives market.

First of all, the marketization of interest rates will enable commercial banks to obtain greater independent pricing power of deposit interest rates and loan interest rates, and the independent pricing ability of commercial banks is a prerequisite for the marketization of interest rates. Under the condition that the interest rate is set by the government, commercial banks can only passively accept the loan interest rate and its floating range determined by the central bank, without interest rate pricing power, and interest rate management is relatively simple; After the marketization of interest rates, commercial banks must set appropriate interest rates according to the supply and demand of the capital market, their own costs and the credit status of credit customers, and the interest rate pricing ability will become the key to the business development of commercial banks. The trend of interest rate marketization will be that the loan interest rate will drop and the deposit interest rate will rise, that is to say, the deposit-loan spread of banks will narrow. The asset-liability structure of China's commercial banks is relatively simple, and the deposit and loan business accounts for a relatively large proportion. Interest spread is the main profit model of commercial banks in China at present. After the marketization of interest rates, the deposit and loan interest rates will be determined by the relationship between supply and demand in the capital market, with frequent changes and poor predictability, which will inevitably increase the uncertainty of banks' costs and benefits and increase their operational risks. The marketization of interest rate will make commercial banks face repricing risk, basis point risk, yield curve risk and implied option risk. According to different interest rate risks, commercial banks can choose interest rate risk management technologies such as on-balance sheet management methods and off-balance sheet management methods, as well as asset securitization technologies. Correct interest rate pricing management is the basis of interest rate risk management, and it is a combination of analysis technology based on data processing and decision-making art. Therefore, the pricing ability of commercial banks has become the micro-foundation of interest rate marketization, which plays a key role in the stable operation of commercial banks after interest rate marketization. In China, which is dominated by indirect financing, the promotion of interest rate marketization needs the further improvement of the pricing power of commercial banks.

Secondly, the market-oriented financial market is the basic condition of interest rate marketization. In developed market economy countries, the central bank's monetary policy operation first causes the change of official interest rate, and the short-term interest rate in the money market changes accordingly. Then the transmission of monetary policy mainly depends on developed financial markets. Money market interest rates affect long-term interest rates through the high correlation between markets and the adjustment of interest rate term structure, and then ultimately affect total demand through various transmission channels. In China's interest rate system, what is actually controlled at present is mainly the bank deposit interest rate. From the experience of various countries, the so-called interest rate control mainly refers to the deposit interest rate control. A stable deposit interest rate helps to stabilize deposits, thus stabilizing the money supply. At the same time, stable deposits are actually the basis for stable payment and settlement. In developed countries, the marketization of deposit interest rate is generally promoted by disintermediation, that is to say, the marketization of interest rate is based on the full development of capital market and money market. China also needs to create more tools and services in the financial market, gradually replace bank deposits, and gradually promote the marketization of the entire interest rate. In China's financial market dominated by banks, bank loans are the main financing channels for enterprises, and equity financing only accounts for a small part. Only when the share of funds in the market is large enough and the market-oriented mechanism is dominant can the interest rate marketization reform be finally completed.

Finally, the development of interest rate derivatives market is an auxiliary condition for interest rate marketization. The experience of developed countries shows that the period of accelerating interest rate marketization is also the period of increasing interest rate risk, and various interest rate risk management tools have emerged. Most interest rates in China's financial market have been marketized, except for corporate bonds. The interest rate of the banking system is semi-market-oriented, and the deposit interest rate has an upper limit. At present, the spot market interest rate of China's national debt has been completely marketized, and the lower limit of the national debt interest rate has been cancelled, which makes the bond market interest rate, especially the long-term interest rate, fluctuate very frequently. The fluctuation of interest rate makes commercial banks and other financial institutions holding a large number of bonds bear huge interest rate risks, which provides a strong internal demand and prerequisite for the hedging transaction of bond futures. At the same time, for speculators, price fluctuations provide opportunities to earn spreads, and interest rate liberalization will attract speculators to participate in treasury bond futures trading. The introduction of interest rate derivatives provides a hedging tool for interest rate changes, which in turn promotes the formation of market-oriented interest rates and contributes to the promotion of interest rate marketization.

Author: Lu Qingjie

Departure: Finance and Insurance

Economic category: financial policy

Library: branch of domestic papers

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