The regulatory function of the government bond market is weak

The main problems are the lack of short-term government bonds in our country, the unreasonable structure of holders, and the lagging development of the over-the-counter market, which directly restricts the activity of government bond transactions. , resulting in a serious lack of liquidity in the government bond market, and the frequency and radiation coverage of the central bank's open market operations were greatly affected.

First, most of the treasury bonds our country has issued are medium-term treasury bonds. For example, since 1999, among the total bonds issued by the Ministry of Finance among banks nationwide, medium-term treasury bonds account for 95.7%. The average repayment period is 6.6 years, and short-term government bonds account for only 4.3%. In Western developed countries, short-term (less than one year) national debt generally accounts for 40% to 50% of all national debt. The short-term Treasury bond market is a market mainly used for open market operations and is a place where the central bank expresses its monetary policy intentions. Here, the circulating varieties of treasury bonds are limited to short-term varieties that can meet the needs of open market operations. Therefore, the lack of short-term government bond market prevents the central bank's open market operations from performing their due regulatory functions.

Second, the structure of treasury bond holders is unreasonable. Treasury bonds play different functions in the hands of different investors. If individual holders hold a larger proportion of treasury bonds, treasury bonds will be less liquid and secondary market transactions will be inactive. The treasury bond market mainly plays a financing function. If institutional investors hold a larger proportion of treasury bonds, the liquidity of treasury bonds will be stronger, transactions in the secondary market will be active, and the regulatory function of the treasury bond market will be stronger.

Judging from the holder structure of the treasury bond market in Western developed countries in the 1990s, individuals’ share of treasury bond holdings basically remained at around 10%, while commercial banks, banks and fund management institutions Institutional investors such as , social security fund management agencies, commercial insurance companies and other financial institutions have become the main holders of government bonds. At the end of 1996, the proportion of financial institutions in the national debt holding structure was 50% in the United States, 80% in the United Kingdom, and 60% in Germany. This structure not only facilitates the issuance of government bonds, but also has strong market liquidity, because in the government bond market, especially the short-term government bond market, the most suitable people for the central bank to conduct open market operations should be institutional investors, and only institutional investors can Treasury bonds will be traded frequently for liquidity management needs. Provide sufficient sources of securities for the central bank's open market operations.

Since the 1980s in our country, the issuance targets of national bonds have mainly been individuals, enterprises, government agencies and institutions. Since 1993, holders of national bonds have been concentrated in individuals, financial institutions, social security funds and other sectors. Among them, individuals are the major holders of national debt. Judging from relevant statistical data from 1992 to 1998, the proportion of individual treasury bond holdings in treasury bond issuance has never been less than 50%, and in some years it has been as high as more than 70%. About 40% of newly issued treasury bonds are also invested by individuals. subscribed. In recent years, most of the large amounts of treasury bonds and policy financial bonds issued in the inter-bank bond market are held by commercial banks. Although the proportion of bonds held by commercial banks has gradually increased, they only account for about 10% of all bank assets. This structure of treasury bond holders, with individual investors as the main body, on the one hand increases the financing cost of treasury bonds, and on the other hand makes the number of tradable treasury bonds seriously insufficient. Because individual investors are generally cash-on-maturity types, and it is inconvenient and costly for individuals to trade treasury bonds, it reduces the liquidity of treasury bonds, seriously hinders the regulation function of the treasury bond market, and makes open market operations lack sufficient carriers.

Third, the development of the over-the-counter treasury bond market lags behind, which seriously restricts the conduct of open market business. This is because when the central bank conducts open market business operations, it handles a considerable amount of government bonds. It is difficult to meet the needs of macro-control only through centralized bidding and matching transactions on exchanges, and OTC transactions provide an important venue for it. Most of the treasury bonds of developed countries are traded over the counter. For example, in the U.S. Treasury bond market, which is the largest in the world, 99% of its secondary market trading volume is traded over-the-counter. The Japanese government bond market ranks second in size in the world. In 1994, its OTC market transaction volume accounted for 99% of domestic transactions. Germany, which has the third largest government bond market in the world, has seen its over-the-counter market turnover account for 85% to 91% of all transactions in recent years. The secondary trading market for treasury bonds in my country is basically limited to stock exchanges. Among them, the Shanghai Stock Exchange occupies a dominant position in the secondary market trading of treasury bonds, accounting for more than 90% of the listed circulation. This situation obviously cannot meet the needs of the central bank's open market operations. In addition, after joining the WTO, foreign capital, especially foreign "hot money" entering the government bond market will inevitably be accompanied by corresponding financial risks. If the open market business is underdeveloped, it will be difficult for the central bank to smooth this risk through the purchase and sale of government bonds in the open market.

Fourth, the liquidity of the secondary market for government bonds is seriously insufficient. Most of the government bonds have become high-quality "real estate" for institutional holders, which limits the formation of market benchmark interest rates and the operation of the central bank's open market business. There are generally three indicators to measure liquidity: first, the turnover rate, second, whether large transactions will affect the market price level, and third, the size of the market transaction volume. The overall liquidity of my country's treasury bond market is insufficient, especially the turnover rate is not high, large trading volume has a greater impact on market prices, and spot delivery volume is small.

Insufficient liquidity of government bonds will inevitably prevent the market interest rates formed in the secondary market of government bonds from reflecting the supply and demand situation in the capital market in a timely, sensitive and accurate manner. The central bank's open market operations and interest rate risk avoidance functions will also be severely restricted.

Due to the current lack of short-term treasury bond issuance varieties in my country, the treasury bond market lacks treasury bond futures and treasury bond option transactions. Due to the inactive inter-bank bond market transactions and the inability to enter the exchange bond market for treasury bond transactions, the treasury bond market is The liquidity of the sub-prime market is weak, which weakens the function of institutional investors in the treasury bond market to use short-term treasury bonds to mobilize funds and use treasury bond futures and treasury bond options to hedge interest rate risks.