Central bank bills, that is, central bank bills, are short-term debt certificates issued by the central bank to commercial banks to regulate their excess reserves, and their essence is central bank bonds.

First, the main purpose and function of central bank bills

1. Adjust market liquidity

The basis of issuing bills by the central bank is that the market liquidity is relatively abundant. In order to prevent inflation, the central bank issues bills to pay a certain interest, recovers excess funds from commercial banks, and reduces the amount of money circulating in the market.

2. It has little impact on the market

Compared with other market adjustment tools such as quasi-principal ratio of deposits, deposit and loan interest rates, the issuance of bills by the central bank has little impact on the market, and the means are moderate, which will not cause interest rates to rise, thus increasing the financing costs of enterprises and affecting the real economy.

3. Enrich the operating tools of open market business.

After the introduction of central bank bills, the central bank can use bills or repurchase and their combinations to carry out "balance control and two-way operation" and roll central bank bills, which increases the flexibility and pertinence of open market operations and enhances the implementation effect of monetary policy.

Two, the central bank bills in the open market business to the primary dealers, individuals can not directly invest. In 2007, there were 52 bill dealers in China Central Bank, all of which were commercial banks except CICC, 3 securities companies, 4 insurance companies and 2 fund companies. Generally speaking, the central bank will issue 3-month bills, 6-month bills, 1 year bills and 3-year bills alternately by means of interest rate bidding or price bidding according to market conditions, with short-term varieties within 1 year bills as the main ones. To understand central bank bills, we first need to understand open market operations. Open market operation is an activity that the central bank uses the method of buying and selling securities in the open market to invest in the financial system or withdraw reserves from the financial system to adjust the credit scale, money supply and interest rate, so as to realize its financial regulation.

Generally speaking, central bank bills help to form the market benchmark interest rate. Because of its flexibility and initiative, central bank bills become the "wind vane" of the money market, guiding the inter-bank market, exchange market and related bond market, and forming a curve of market interest rate and expected rate of return for the corresponding period.