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Paper Keywords National Debt Market Monetary Policy
The experience of interest rate marketization reform in China shows that promoting interest rate marketization reform through the development of national debt market is one of the more effective reform paths. Judging from the requirements of the development of modern market economy, what can really become the benchmark interest rate is the interest rate in the national debt market. This paper puts forward suggestions and measures to improve China's national debt market.
First of all, interest rate marketization needs a sound national debt market.
The experience of interest rate marketization reform in China shows that the interest rate marketization reform promoted by the development of the national debt market is one of the more effective reform paths. The market-oriented reform of China's national debt has played an important role in the interest rate market-oriented reform in the past decade. The formation of the secondary market of national debt and its yield, the introduction of the bidding mechanism in the primary market of national debt, the marketization of the repurchase rate of national debt and the pilot of the futures trading of national debt are important contents of the interest rate marketization reform in China, which has accelerated the reform process. In recent years, the central bank has carried out open market business to guide market interest rates, and various interest rate marketization reform measures have been introduced, which has prepared the basic conditions for the final liberalization of deposit and loan interest rates of commercial banks. However, with the deepening of China's financial system reform and the gradual acceleration of interest rate marketization, the central bank urgently needs to determine a market benchmark interest rate to guide the market interest rate.
The so-called market benchmark interest rate is the interest rate that plays a decisive role when multiple interest rates coexist. It is an important reference to determine the prices of all financial products in the financial market, and it is a recognized, generally accepted interest rate with important reference value. At present, the refinancing rate of China's central bank to commercial banks actually plays the role of benchmark interest rate. But from the requirements of the development of modern market economy, it is the interest rate in the national debt market that can really become the benchmark interest rate.
First of all, from the general law of the international financial market, what can become the benchmark interest rate must be the interest rate of financial commodities with good liquidity. The interest rate of national debt has this characteristic. National debt is called "quasi-currency" and has strong liquidity. Its price formation and fluctuation can sensitively reflect the changes of supply and demand in the capital market, so it can be used as the basis for pricing other financial instruments. It is true that the interest rate of national debt will also be affected by inflation and maturity risk. However, since the repayment of principal and interest at maturity is a fixed amount, the national debt interest rate will naturally become the representative of the benchmark interest rate when the inflation rate and interest rate changes can be expected. In fact, the market benchmark interest rate of developed countries such as the United States and Japan is the national debt interest rate, which is the central link of the whole interest rate system, and its change determines the change of interest rates of other financial instruments.
Secondly, as the benchmark interest rate, it must be able to better reflect the interest rate level in different periods. The interest rate of national debt also has this advantage. In the term structure theory of bonds, expectation theory and market segmentation theory explain the reasons for the difference in interest rates of bonds with different terms from different aspects. Expectation theory proves that the reason for the difference in bond interest rates is the length of the term, that is, the long-term interest rate is equal to the average of the expected short-term interest rate before the bond expires. The theory of market segmentation shows that the interest rate of bonds with different maturities depends on the supply and demand relationship of various bond markets on the premise that the market is incomplete and bonds with different maturities are not substitutable. Term structure theory and liquidity premium theory combine the above two theories, and the long-term interest rate is equal to the average of the expected short-term interest rate before the maturity of bonds plus the term premium reflecting the supply and demand of bonds with different maturities, thus fully explaining the reasons for the difference in interest rates of bonds with different maturities. Although the decision of different term interest rates of non-national bonds (such as corporate bonds) can also be explained by the above theory, it cannot be used to determine the term structure of interest rates because of the risk of default. The issuer of national debt is the government, and there is generally no default risk, so its interest rate structure will not be disturbed by default risk, so it can better reflect the difference of interest rates in different maturities and become the optimal choice of benchmark interest rate. Although the interbank lending rate is also an interest rate that reflects the supply and demand of market funds, it is comparable to the national debt market in terms of market transaction scale, number of traders and standardization, but the interbank lending market is only a short-term lending market after all, and the interbank lending rate is only a reference for short-term interest rates. The national debt market is a market that provides short, medium and long-term bonds with different maturities, which can reflect the interest rate level of different maturities.
Once the benchmark interest rate of national debt is formed, the development of national debt market will have a great impact on other financial markets. It not only changed the scale pattern of the financial market, but also affected the interest rate determination of other markets, and there was an obvious transmission effect of interest rate marketization, among which the interbank lending market and bank deposit market were the most obvious. Because a large amount of capital demand after the development of the national debt market will first impact the interbank lending market and the bank deposit market, the result will inevitably be that under the influence of the development of the national debt market and the marketization of the national debt interest rate, the interest rate marketization mechanism of the interbank lending market will be more perfect, and the bank deposit market will gradually relax interest rate control.
Second, suggestions and measures to improve China's national debt market
Perfecting China's national debt market, improving the liquidity of the national debt market and promoting the marketization of interest rates are necessary conditions for giving full play to the effects of China's monetary policy. At present, the perfection of China's national debt market should start from the following aspects.
1. Improve the issuance mechanism of national debt.
(1) Further standardize the rolling distribution mechanism. Expand the scope of benchmark national debt, further improve the rolling issuance mechanism, make the issuance of national debt in the primary market form a more sustainable issuance interest rate curve, and also make the bidding price of national debt in the primary market play a better reference role in the pricing and valuation of national debt.
(2) Try to introduce the pre-issuance mechanism of national debt. In order to establish the price disclosure mechanism before bond issuance, standardize the bond issuance behavior in the primary market, and learn from the pre-issuance practices of international mature bond markets, China national debt market tried the pre-issuance operation of national debt.
2. Optimize the term structure and holder structure of national debt.
Optimize the term structure and holder structure of national debt, enhance the liquidity of the national debt market, and improve the regulatory function of the national debt market.
(1) Reasonably design the term structure of national debt. The formation of the term structure of national debt is often a complex and ever-changing process. The government must consider the requirements and wishes of itself and the debtor, and at the same time consider the macroeconomic situation and solvency and other factors to make a choice on the term structure of the national debt.
(2) Optimize the structure of national debt holders. The single structure of national debt holders is a major problem in China's national debt market. This greatly restricts the standardization and development of China's national debt market. In view of this situation, the following suggestions are put forward: first, increase the scale of national debt held by the central bank, and cooperate with the application of monetary policy to improve the transmission effect of open market operations. Second, some restrictions on the purchase of national debt by commercial banks should be lifted, so that national debt becomes an important part of the asset structure of commercial banks. Third, promote the development of existing pension funds and other institutions and cultivate national debt investment funds. This will effectively improve the participation of the national debt market and promote the issuance efficiency of the national debt market. Fourth, foreign investors are allowed to buy a certain proportion of national debt. This is not only conducive to the implementation of China's foreign capital utilization policy, but also conducive to adjusting the structure of national debt holders.
3. Vigorously cultivate institutional investors.
At present, the trading subject in the market is relatively single. Although the number of trading entities in the inter-bank bond market has increased to more than 900, financial institutions are still the mainstay, and non-financial institutions rarely enter this market, which limits the coverage of this market. In China, commercial banks are the main investors in the current bond market. We should vigorously develop non-financial institutional investors to enter the national debt market, especially bond investment funds. Because bond investment funds have the advantages of professional investment and economies of scale, their investment style is more stable, which is conducive to the healthy and stable development of the national debt market. 4, the development of national debt investment fund.
There are two basic forms of national debt funds: closed and open. Compared with general securities investment funds, national debt investment funds are a combination of state credit and non-state credit, and state credit is the premise and foundation of its existence. Most of the funds of the national debt fund are invested in national debt. Compared with other types of investment funds, treasury bond investment funds have the characteristics of high reputation, low risk and stable income.
5. Vigorously develop intermediary institutions in the national debt market.
(1) Expand the scope of primary dealers, improve the market maker system and activate the national debt market. First, expand the scope of primary dealers. On the premise of strict requirements, China's central bank should actively create conditions to further expand the number of first-class self-dealers and let some securities companies and trust and investment companies with good performance and high reputation join the ranks of first-class self-dealers as soon as possible. Second, improve the market maker system and expand the market maker team. Although China has established a market maker system, due to the imperfect system, there are few types of bonds quoted, and many bonds cannot be quoted in time or have no quotation, so it is difficult to find and disclose price information in time.
(2) Vigorously develop brokers in the national debt market. In order to improve the liquidity of the national debt market, some governments attach great importance to brokerage business. Broker, as an agency providing intermediary services for traders, is an important medium to connect traders. Brokers themselves do not participate in trading, but only allocate market transactions effectively, provide price discovery mechanism and improve the success rate of trading. With the continuous development of China's national debt market and the increase of market participants, direct trading is not conducive to improving market efficiency. At present, there is only one brokerage firm in China, which lacks competition and efficiency. Therefore, it is particularly urgent to train a large number of active brokers to develop the OTC bond market in China.
6. Establish a unified, standardized and hierarchical national debt market system.
(1) An orderly, unified and efficient national debt market is the premise for the central bank's open market policy interest rate transmission mechanism to play its role. In the construction of the national debt market, we should focus on establishing the inter-bank bond market as the core market at present. We will continue to expand and improve the inter-bank bond market and attract investors from various financial institutions as bond wholesale markets.
(2) China's current national debt circulation market is divided, and the inter-bank national debt market and the exchange national debt market exist separately. The two sub-markets of the national debt market operate independently and communicate with each other. However, market transactions are continuous, and artificially dividing different trading subjects into different markets is not conducive to expanding market scale and improving market mechanism. Moreover, the existence of the price difference between the two markets is not conducive to the management to better grasp the macroeconomic situation. Therefore, we should gradually unify the two markets and promote the trading of government bonds in a wider scope. It is the key to unify the circulation market to improve the infrastructure of national debt trading and build a unified national debt custody settlement and clearing system.
7. Actively develop the treasury bond futures market.
At present, there are no derivative financial instruments in China bond market. Under the existing trading system and means, investors can't effectively solve the huge risks brought by interest rate fluctuations, which makes it difficult for institutional investors to hedge and avoid risks and hinders their further participation in the bond market. Investors chasing up and down in the market is not conducive to the stability of the bond market. The development of derivative financial instruments such as treasury bonds futures can provide investors with effective means to avoid risks and promote market price discovery, which is very important for institutional investors such as commercial banks, insurance companies, credit cooperatives and funds who have invested heavily in bonds for a long time.
refer to
[1] Jing Xuecheng and Shen Bingxi. China's interest rate marketization process [M]. China Financial and Economic Press, 1999.
[2] (America) mishkin: Monetary Finance [M]. China Renmin University Press, 1998.