“It is necessary to enrich the monetary policy toolbox,” the snippet reads in Excerpts of Xi Jinping’s Speeches on Finance Work. “The People’s Bank of China must gradually increase the trading of treasury bonds in its open market operations.”
Former Chinese trade official who backed Donald Trump slams US for ‘dismantling’ global trade
Former Chinese trade official who backed Donald Trump slams US for ‘dismantling’ global trade
Instructing the central bank to buy more treasury bonds is a rare and unexpected move in China. Sources say this last occurred around the start of the 21st century. After that, when the central bank sought to inject liquidity into the market, it started relying on relending tools and cuts to the reserve requirement ratio – reducing the amount of cash that commercial banks must hold as reserves and releasing large sums of money into the market as long-term liquidity.
In the five months since Xi’s instruction, public records indicate that the PBOC has not yet started buying treasury…
