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On the innovation and development of Chinese government bonds

Author: ZouCunHui From: www.yourpaper.net Posted: 2009-04-01 10:58:06 Read:
[Abstract] Chinese government bonds in the development of the national economy play an important role, and gathered a lot of money for the socialist economic construction, to provide a guarantee for the full implementation of the fiscal policy and monetary policy, we should change the Treasury bill rate, increase the national debt varieties and optimize the structure of the Term and other aspects of the development of the Chinese government bond market.
[Keywords] government bonds; bond market; Innovation and Development

The national debt is an important tool for the implementation of fiscal policy and monetary policy, for centralized social idle funds to increase social investment, as well as macro-control of the national economy plays an important role. Government bonds as a type of the Chinese government for the purpose of raising financial funds and issue bonds to investors, along with the development of the government bond market and the economic and social environment, increasing its circulation and has made remarkable achievements.

First, the problem of Chinese government bonds in the market running

With the gradual increase of the issuance of treasury bonds with the increasing of the volume of transactions, the bond market has become an important part of the entire market system, fiscal policy and monetary policy point of integration as well as an important channel of social capital cycle. After 20 years of exploration and practice, the national debt to a multi-species, multi-period, scrolling issue, adjust revenue and expenditure, to make up the deficit, raise funds for construction, the full implementation of the fiscal policy and monetary policy has played a positive role. However, due to the late start of China's government bond market, government bonds a secondary market is still in the initial stages of a highly developed and sound compared to the government bond market there is still a wide gap with foreign countries, there are still some problems to study and solve problems.
Treasury rates does not become the benchmark interest rate in the market. Under the conditions of market economy, the national debt interest rates in the financial market is often used as the benchmark interest rate to determine the level of market interest rates, and other types of bonds or financial assets are Treasury rates of the corresponding period, depending on the risk, duration or cost to determine its price or interest rates, the yield of the same term bond yields remain relatively stable differences, and change with the change in interest rates of government bonds. Government bonds with higher security, mobility, follow the benefits and risks on the principles, its interest rates are generally lower than ordinary deposit rates. However, China has yet to achieve the interest rate market, the issuance of government bonds are fixed-rate bonds, and bank deposit rates as the basis for determining the interest rate of a few percentage points higher than the same period in bank deposit rates, higher inflation period also preserve and increase subsidies to the national debt over three years to implement. This approach not only provides a signal of financial markets in the money supply tightness, but also increase the financing costs of the national debt, increasing the debt burden.
2 Term Structure suited to bond market development needs. In developed market economies, the short, medium and long-term structure of the national debt is more reasonable. The government issued treasury bonds of different maturities, has a very important significance for the government budget revenue and expenditure. Which short-term government bonds can be used for recurrent expenditure and short-term funds transfers, long-term bonds to cover the annual budget deficit. And most of China's treasury bonds are medium-term government bonds, for a long time has not been issued over the short-term and long-term government bonds. Single bond maturity structure, it is difficult to meet the diverse needs of the national debt holders of financial assets deadline bond issue size rapid expansion in the short term, the national debt servicing time is too concentrated, the objective is not only affected government bond funds effective use, and become obstacles to further expand the national debt scale, and the central bank is unable to select a variety of government bonds of different maturities open market operations, the impact of the implementation of the monetary policy effect.
3. Bond investors structural imbalance. Western countries, personal financial assets and more entrusted to the management of institutional investors, the Treasuries market participants is the main institutional investors, individuals directly owned government bonds generally will not exceed 10%. Treasury Bond object to individual residents, city resident investors accounted for the main part, the amount of investment in rural areas is very limited. Treasuries as one of the important tools of financial regulation in the modern market economy, has an important role should not be limited to financial fundraising stage, and should expand the proportion of institutional investors to subscribe to improve the efficiency of the issuance of treasury bonds, but also conducive to the future listing of bonds issued The flow of circulation, active government bonds market.
Treasury bonds is the lack of diversification. Government bonds of all maturities from 1991 began to market-oriented issue, and these are in line with their specific financing needs. However, the actual issue pleasing investors optimistic about the short-term government bonds, especially-year bonds, the best-selling, reflecting the psychological expectations of the residents of the market price, the deposit rate. Therefore, the duration of the design of the national debt should take into account the market demand should be long, long, should be a short, short, in order to meet the needs of different institutions and buyers of different income levels as well as different levels of investor preferences.

Second, the Chinese government bonds to be followed in the operation of the market principle

Since 1981 began issuing treasury bonds, China has basically established the issuance of treasury bonds market, and Treasuries flow market, With the development of the socialist market economy, the bond market should continue to develop and perfect. The formulation of the Treasury market management policies and development direction, both starting from the status quo of Chinese government bonds market, but also to draw on advanced international experience, based on the government bond market development, the establishment of an adaptation of the requirements of economic development, low cost, high efficiency of treasury bonds market and the high fluidity, high-security government bonds liquid markets. Need to constantly improve the bond market, and improve the efficiency in the use of treasury funds, to better grasp the economic operation, ease the economic fluctuation cycle and the stable economic growth, for which you want to adhere to the following principles:
Adhere to the principles of modest scale of the issuance of treasury bonds. The countries issuing treasury bonds, to consider the full range of issues, from China's national conditions and capabilities. Important things to consider three factors affect the bond issue size: society should debt capacity is to determine the number of the most basic factors of the issuance of treasury bonds; solvency of the country is a decisive factor to determine the number of boundaries of the issuance of treasury bonds; country's fiscal policy on the issuance of treasury bonds The quantity has an important impact. In the process of the issuance of treasury bonds, it is necessary to adapt to the needs of the ongoing reform and economic construction, but also to the solvency and debt capacity is limited to non-trade-off. We must strive to improve the proportion of fiscal revenue in the gross domestic product (GDP), to reduce the national debt dependence and debt service ratio. While this principle as a guide to optimize the structure of the Term, to achieve the diversification of the national debt maturity structure to adjust the structure of Treasury rates, and gradually realize the bond interest rate market.
Adhere to the principle of fiscal policy and monetary policy coordination. The national debt is a combination of fiscal and monetary policies, whether fiscal policy or monetary policy, its implementation is inextricably linked with the national debt. Adapt to the national debt policy is an important means to achieve the goals of fiscal and monetary policy control and guarantee the effective implementation of the national debt policy also requires monetary policy to be coordination. To improve the liquidity of government bonds, has a significant role in the coordination of fiscal policy and monetary policy. The central bank through open market operations, regulation of government bonds, flow and flow, to regulate the stock of money in circulation, to ensure that the balance between supply and demand and promote stable and healthy development of the economy.
We need to strengthen the supervision of government bonds against Treasuries risk principle. Treasuries in the operation of the market, there is the issue of risk, interest rate risk, competitive risk, accounting management, risk and other risks. In order to standardize and improve the bond market, must adhere to strengthen the bond supervision, to prevent the risk of government bonds. First to establish and perfect the Treasury regulations, the Treasury management laws to go by, clearly the responsibilities of the Debt Management department permission, mutual restraint relations and legal responsibility of Finance and the People's Bank to strengthen cooperation and coordination, to further enhance the bonds regulatory efficiency. To strengthen the supervision of underwriting agencies, to raise the national debt risk awareness initiative to standardize the underwriting of its foster market awareness and social consciousness. Strengthen the effective management of the bond sale of the entire process and internal accounting, and take active steps to maintain the normal order of the government bond market.
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