Pan Gongsheng, Governor of the People's Bank of China: Gradually bring the purchase and sale of government bonds in the secondary market into the monetary policy toolbox

The 2024 Lujiazui Forum was held from June 19 to 20. Pan Gongsheng, governor of the People's Bank of China, said at the forum that the purchase and sale of government bonds in the secondary market would be gradually incorporated into the monetary policy toolbox.

Pan Gongsheng pointed out that in recent years, with the rapid development of China's financial market, the scale and depth of the bond market have gradually improved, and the conditions for the central bank to put the base currency into the secondary market by buying and selling government bonds have gradually matured. Last year, the Central Financial Working Conference proposed to enrich the monetary policy toolbox and gradually increase the purchase and sale of government bonds in the open market operation of the central bank. The People's Bank of China is strengthening communication with the Ministry of Finance to jointly study and promote implementation. The whole process is gradual, and the rhythm, term structure and trusteeship system of national debt issuance also need to be studied and optimized simultaneously.

It should be noted that the inclusion of treasury bond trading in the monetary policy toolbox does not mean quantitative easing, but rather positioning it as a basic money delivery channel and liquidity management tool, both buying and selling, and combining with other tools to create a suitable liquidity environment.

Pan Gongsheng said that the rapid development of the financial market has also brought new challenges to the Central Bank. The risk event of the Bank of Silicon Valley in the United States has inspired the central bank to observe and evaluate the situation of the financial market from the perspective of macro prudence, correct and block the accumulation of financial market risks in a timely manner. At present, it is particularly important to pay attention to the term mismatch and interest rate risk of some non bank entities holding a large number of medium - and long-term bonds, and maintain a normal upward sloping yield curve, Keep the positive incentive effect of the market on investment.