A view of the PBC building in Beijing Photo: VCG

 
The People's Bank of China (PBC) and the Ministry of Finance (MOF) recently held their first joint working group meeting on treasury bond trading. During the meeting, both departments pledged to strengthen policy coordination and improve mechanisms to support the stable development of the bond market, ensuring a favorable environment for the central bank's government bond transactions.

The two departments recognized their close cooperation in the PBC's government bond trading, established an operating mechanism for the joint working group, and exchanged views on the operation of the bond market.

The central bank's engagement in treasury bond trading is an important move to enrich the monetary policy toolkit and strengthen liquidity management, according to the meeting.

Both the PBC and the MOF stressed that they would step up coordination and improve relevant mechanisms in order to maintain the steady development of the bond market and provide an appropriate environment for the central bank's treasury bond trading.

The central government has repeatedly stressed the coordination of macro-policies, and the establishment of such a joint working group is one of the most important mechanisms in this regard, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Wednesday.

Purchasing government bonds appropriately reflects the central bank's support for fiscal policies, Xi said. Through relevant open market operations, the central bank is able to adjust money supply and interest rates in accordance with market supply and demand, as well as liquidity, which will help stabilize the bond market, he said.

The PBC conducted open market government bond transactions during the past two months, resulting in a net purchase of bonds with a face value of 100 billion yuan ($14.15 billion) in August and a net purchase of bonds worth 200 billion yuan in September, according to data from the central bank.