Under The Indirect Control Of The Central Bank Open Market Operations

Before 1994, the central bank of China carried out random monetary policy formed by extensive economic development. Accordingly, a direct method of regulation and control was chosen.. At the end of 1997, People's bank of China announced to replace the credit-quote regime of state-owned or commercial banks with a new management system which can be describes as "guiding plan ", self-equilibrium, proportionate administration and indirect regulation ." The new system indicates that the central bank took up an indirect way to improve economic development by using all kinds of monetary policy tools .On the condition of proportionate administration, open market operation (OMO), one of the three major monetary policy tools, with the characteristics of initiative, flexibility and easy controlled, is becoming more and more important. Therefore to study the problems emerging in China`s open market operation is of momentous current significance. This thesis is based on all these thoughts.The thesis is divided into three parts. Instruction directly comes to the point by raising the problem lying in China`s OMO. Then the first part analyses the experiences of open market operation in developed countries and areas, pointing out the generality of their operations . As to developing countries, this part lays particular emphasis on the comparison of them to draw ripe experience from them. The second part attached more important to the discussion of China`s OMO. The focus of attention is put to its necessity and feasibility. The third part is the central part of this thesis. It mainly deals with the development and current situation of China's open market operation. Specially the problems and imperfection of our open market operation reanalyzed exhaustively in this part. Generally speaking, the insufficiency in the amount of treasury bill ,the imperfection of treasury bill structure, the immaturity of bond market between banks and the non-liberalization of interest rates restrict the development of China's open market operation. At the end of the third part, some suggestions of policies are provided to improve China's open market operation."Open market operation indirectly regulated by the central bank " is a wide and profound topic, only a tiny part of which is dealt with in this paper. There're many inadequacies in it. And all of these inadequacies will push me to study further in this field.