Of all the problems faced by China's national debt market, the serious lack of liquidity in the secondary market is the fundamental problem. Undoubtedly, if the liquidity problem is not effectively solved, it will be difficult for China's national debt market to gain its benchmark position in the domestic risk asset pricing. First of all, we should unify people's understanding of the positioning of the national debt market. Li Yang, director of the Institute of Finance of China Academy of Social Sciences, believes that from the financial point of view, the national debt market is a benchmark market, and the national debt is a benchmark financial product and a risk-free financial asset. It "constitutes the foundation of all financial superstructures", and all financial instruments are calculated and operated according to it, so all economic entities rely on it to hedge risks. In addition, the term structure of interest rate formed by the national debt market will become the basis of the interest rate structure of the whole society. Without a reasonable term structure of interest rate, almost all financial activities are difficult to carry out, or it is difficult to carry out effectively. This function is irreplaceable in other financial markets. National debt is the main target of the central bank's open market operation, and the national debt market is the main channel and place for its open operation. If there is no large-scale and highly liquid national debt market, the open market operation cannot be effective and flexible. For financial institutions, the developed national debt market is the basis of their liquidity management; For industrial and commercial enterprises, national debt is also the main tool for their liquidity management; For the government, a developed national debt market will effectively reduce the cost of government financing; For individual investors, the depth and breadth of the national debt market is a prerequisite for them to establish an effective portfolio and hedge risks. In other words, because the economy is always developing and the financial "superstructure" is always growing, there is no problem of "repayment" of the national debt as a reserve asset issued by money and as a "secondary reserve" asset of financial institutions and non-financial institutions. If the relationship between finance and finance is straightened out, Li Yang believes that there is objectively a space for non-inflationary bond issuance totaling several trillion yuan in China's economy. Secondly, we should pay full attention to the construction of pre-issuance and new issuance market of national debt. The pre-issuance market of national debt refers to the market that has announced the auction of national debt but has not yet issued it. The cultivation of pre-issuance market will help to find (or price) the price of bonds to be issued, and greatly reduce the uncertainty of the bidding level of the first-class dealers to auction bond prices. After all, the bidding of primary dealers for each new issue of bonds does not represent the real needs of the whole society. Therefore, if there is a pre-issue market, the pricing of new bonds will undoubtedly be biased, and at the same time, it will increase the bidding risk of primary dealers, although primary dealers can also ask their customers or other institutions before the auction. Recently, the national debt pre-issuance market, which may be implemented in 2004, is a positive signal for the development of China's national debt market. The next step should be to study how to effectively improve the liquidity of the recent market. This involves the construction of the microstructure of the national debt market. Third, we should pay attention to the fund settlement of treasury bond transactions and the construction of treasury bond delivery system, which is an important part of the infrastructure construction of treasury bond market. China national debt market is divided into inter-bank bond market, stock exchange market and commercial bank counter market, and the three markets are seriously separated. In fact, centralized custody, delivery and liquidation of national debt are the key to the unification of the national debt market. National debt is essentially a short-term capital market (short-term cash market and repurchase market), and banks are the most ideal capital platform for all investors. No matter retail customers, corporate customers, institutional investors and securities brokerage companies, they are all in bank capital accounts, but the capital flow mode of any potential investor is different. At any time, some investors always have idle funds. Under the current situation that China's existing national debt market is divided into three parts, these funds cannot seek investment income that exceeds the demand of banks. This is one of the important reasons for the low liquidity of the secondary market caused by the decentralized custody of national debt in China. The biggest advantage of centralized national debt in the central bank and paperless registration is that the market can reach the widest range of investors. As long as investors have a capital account in the bank, they can directly invest in government bonds, which is convenient and can save transaction costs. Moreover, the repurchase of government bonds is the most operable, and both sides have the greatest security guarantee. In this way, with the popularization and marketing of banks' knowledge about investors' investment in treasury bonds, at least hundreds of billions of temporarily idle funds can be mobilized to invest in treasury bonds, and the financing cost of treasury bonds is inevitable. With regard to the bank fund settlement system, the People's Bank of China successfully launched the national modern payment system, namely RTGS system, in 2002, which is similar to the FEDWIRE system in the United States, and the central government bond registration and settlement system has been running successfully for seven years. The above problems can be solved by effectively integrating these two systems into a unified system for real-time settlement of funds and national debt. Fourth, we should pay attention to the microstructure reconstruction of the national debt market. As far as the secondary market of China national debt is concerned, the primary goal of improving the market microstructure is to maintain a highly competitive graded national debt market. It contains at least two levels of markets, one is the wholesale market between first-class dealers, and the other is the retail market between first-class dealers and non-first-class dealers, and between individuals and enterprises. In the retail market, you accumulate or digest your own inventory in primary transactions. In the wholesale market, in order to improve the transaction efficiency and maintain the anonymity of transactions, the broker system between first-class dealers should be introduced. These brokers are responsible for collecting the trading quotations and intended trading quantities of various types of government bonds by primary dealers, arranging the final transactions between them, and disclosing the trading information to the market at the first time. At present, the microstructure construction of the domestic national debt secondary market is still in the initial stage, and the related operations are still in the exploratory stage, whether it is the wholesale market or the retail market. However, in order to speed up this process, the participation and competition of foreign financial institutions will certainly play an important role in improving the microstructure of China's national debt market. Opening directly to foreign financial institutions, allowing them to participate in the construction of the microstructure of the national debt market, and selectively granting foreign financial institutions some powerful and stable first-class dealer qualifications is one of the effective ways to reduce costs. Fifth, pay attention to the relevant system construction of market trading environment, including market transaction cost, transaction tax system, transaction information disclosure, market supervision, transaction risk control, behaviors affecting market participation and other rules and regulations. As far as China's national debt market is concerned, recently, the People's Bank of China has relaxed the floating space of the benchmark interest rate of commercial bank loans, but clearly stipulated that retail loans are not within the adjustment range. Retail loan is a kind of loan without any risk. According to the risk pricing principle, the loan interest rate should be allowed to be reduced by at least 50%. If this rate is really allowed to be lowered or completely liberalized, then both individuals and corporate investors will actively use idle funds to invest in national debt in the secondary market. The biggest goal of government departments is to improve the liquidity of the national debt market and reduce all possible transaction costs. They should make full use of their own regulatory resources and tools, consider various factors that affect the trading environment of national debt as much as possible, formulate targeted rules of the game, and encourage the widest range of potential investors to participate in the trading of national debt market. However, we should be cautious in the government bond derivative market (except for government bond repurchase). Although the treasury bond futures and options market is of great benefit to investors to avoid interest rate risk, it is inevitable that the treasury bond futures market will be closed again if these derivatives are not rashly launched on the basis of a spot market with the strongest liquidity and huge transaction scale, and before the governance structure of primary dealers is not perfect and a healthy interest rate risk control culture is not formed. In a sense, the benchmark function of the national debt yield curve is irreplaceable. However, the formation and development of this role depends on the high liquidity of the secondary market of national debt. Therefore, the liquidity of the secondary market of national debt is not only a problem of the market itself, but also a big problem related to whether the risk pricing mechanism of the whole financial market can be effectively formed, which should be an important consideration for us to analyze, study, reform and improve our national debt market.