Open market business: the central bank publicly buys and sells securities in the money market. One of the tools of monetary policy is to regulate the money supply. According to the development of the economic situation, when the central bank thinks it is necessary to tighten the money supply, it will sell securities accordingly, recover part of the base currency and reduce the amount of funds available to financial institutions; On the contrary, when the central bank thinks it is necessary to relax monetary policy, it will buy securities to expand the base money supply and directly increase the amount of funds available to financial institutions.

Since 1998, the People's Bank of China has established a primary dealer system for open market business, and its scale has gradually expanded. It has become one of the main tools for the daily operation of the monetary policy of the People's Bank of China, and has played an active role in regulating the liquidity at the banking system level, guiding the interest rate trend in the money market, and promoting the reasonable growth of the money supply. There are 49 primary dealers involved in 20 19 open market business.

1. Compared with other monetary policy tools, open market business has the characteristics of initiative, flexibility and timeliness. The scale of open market business can be completely controlled by the central bank, which has considerable initiative; Open market business is flexible, buying more and selling less, selling more and buying less, and the money supply can be "fine-tuned" or greatly adjusted, which has great flexibility; The operation of open market business is time-sensitive. When the central bank sends out an intention to buy or sell, the transaction can be executed immediately, and the excess reserves of financial institutions participating in the transaction will also change accordingly. Open market business can be operated frequently and continuously, and if necessary, it can be reversed, from buying securities to selling securities, so that this policy tool will not cause great fluctuations in the whole financial market.

2. The open market business of China People's Bank began with 1994 foreign exchange market operation. From 65438 to 0994, the foreign exchange management system was reformed, the bank settlement and sale system was implemented, the inter-bank foreign exchange market was established, and the RMB exchange rate was merged. In order to keep the RMB exchange rate basically stable, the People's Bank of China buys and sells foreign exchange in the foreign exchange market every day. 1In April, 1996, the People's Bank of China started the open market business of buying and selling government bonds. Since then, the open market business has developed rapidly. By the end of 2000, the base currency invested by the People's Bank of China through the open market business was180.4 billion yuan, accounting for 63% of the newly added base currency of the People's Bank of China. Open market business has developed into one of the main monetary policy tools of China's central bank.