Research On The Coordination Mechanism Of Fiscal And Monetary Policy Under The Treasury Cash Management

At present,China's finances show the phenomenon of high treasury idle funds and high debt stocks.This situation reflects the lack of treasury cash management concepts and the structural contradictions of the treasury system.Under the background of the reform of the fiscal and taxation system in the three major areas of The Third Plenary Session of the 18 th CPC Central Committee and The 19 th National Congress of CPC,the new "Budget Law" has been made from the aspects of treasury accounting,centralized collection and payment system,financial account,and treasury cash management.The regulations and the implementation of the “ Local Treasury Cash Management Pilot Measures”mark the full opening of the treasury cash management system reform.At the practical level,the current treasury reform focuses on solving the problem of China's fiscal “double high”.The construction of the institutional mechanism is based on the minimum cash holdings of the national treasury and the maximization of investment income.It is not concerned about the impact of the treasury cash management on the macroeconomic policies in the actual operation process.At the theoretical level,the existing theory bases fiscal and monetary policy coordination on the assumptions independent of treasury cash management,ignoring the intrinsic link between the two.Thus,traditional theories cannot explain the empirical facts that fiscal monetary policy coordination relies on an effective treasury cash management system.In this realistic and theoretical context,this paper aims to explore the interaction mechanism between treasury cash management and fiscal monetary policy,and build a compatible treasury cash management system based on this,so that it can take into account two types of objectives: The minimum cash holdings based on the payment and the maximum investment income;the second is to promote fiscal and monetary policy coordination.This paper first analyzes the treasury cash management operation mechanism,core performance targets and the channels of influence on fiscal and monetary policies.Secondly,the core content of this paper is the discussion of the impact mechanism of treasury cash management on fiscal and monetary policy.According to the law of treasury cash operation,this paper mainly discusses the impact of the two stages of treasury cash management on fiscal and monetary policy.That is,the impactmanagement mechanism of the balance management and the marketization of treasury funds on fiscal and monetary policies.Finally,the successful experience of foreign countries is summarized,and the construction path of China's compatible treasury cash management system is proposed.This article will be organized in the following five sections:The first part includes the first chapter to the third chapter.The main content is the theoretical basis of the coordination of treasury cash management and fiscal and monetary policy and the historical evolution and current status of China's treasury cash management.The aim is to understand the common characteristics and core objectives of treasury cash management and the role of treasury cash management in monetary policy coordination.The second part is the fourth chapter and the fifth chapter.It mainly studies the relationship between fund management and fiscal and monetary policy.This paper analyzes the impact mechanism of treasury fund volatility on fiscal and monetary policy,and demonstrates the necessity of squeezing the volatility of the fund at the bottom of the reservoir.It is not only the inevitable choice for treasury cash management to further stabilize the treasury fund at the minimum holding scale.Eliminating the negative impact of stock fund fluctuations on fiscal and monetary policies is an inevitable choice.Therefore,determining the minimum cash holding size at the bottom of the treasury is key.This paper analyzes and summarizes the basic principles and deficiencies of traditional methods of measurement,and proposes a method for calculating the treasury cash holdings suitable for China's situation.The third part is the sixth chapter.The purpose is to analyze the impact of the marketization of treasury funds on fiscal and monetary policies.The marketization of treasury funds is an advanced stage of treasury cash management.The main purpose is to realize the time value of funds at the bottom of the treasury and maintain the balance of the target at the bottom of the treasury.It is also the main aspect affecting fiscal and monetary policy.This part first analyzes the influencing factors,basic models of the treasury capital market and the realistic choice of China's treasury cash management model.Then take the commercial bank deposit model as the research object,and theoretically analyze the influence mechanism of the treasury fundmarketization on fiscal and monetary policy.Finally,the results of theoretical analysis are verified by empirical analysis.The fourth part is the seventh chapter and the eighth chapter.The relationship between the two types of performance objectives of the treasury cash management and the coordination of fiscal and monetary policies,and the successful experience of the operation of foreign treasury in the country,proposes a path to build a compatible cash management system.This part constructs the mechanism of treasury cash management and fiscal and monetary policy coordination from the construction of the treasury cash management system,the goal coordination,the coordination of the operation level and the organization and coordination between the departments.Based on the above research ideas and logic,the main findings of this paper are as follows:First,from the perspective of financial fiduciary responsibility,the primary responsibility of treasury cash management is to achieve safe payment.On this basis,the performance target of treasury cash is realized,that is,the minimum cash holding amount and the maximum investment income.However,the reality is that there is not only large-scale idle funds in China's treasury fund,but also a strong volatility.In view of this phenomenon,this paper takes the cash balance of the library as the research target,firstly analyzes the impact of fund accumulation on the fiscal and monetary policies and macroeconomics under the IS-LM framework.The conclusion of the study indicates that the accumulation of funds at the bottom of the treasury reduces the demand for self-consumption and leads to a decline in production.At the same time,it reduced the money supply and weakened the effect of fiscal policy.In this paper,the theoretical analysis of the central bank's balance sheet and the VAR model empirically test the impact of the increase in the fund base on the money supply.The study found that the increase in funds at the bottom of the fund has a negative impact on monetary policy.Because the fiscal policy is more complicated,this paper does not use the VAR model to analyze the financial effect of the fund,but based on the GDP accounting method in China,it cannot reflect the impact of the fund accumulation on the fiscal policy.The analysis found that fluctuations in the funds at the bottom of the fund hedged some of the fiscal deficits,making nominaloutput higher than actual output.Based on the research conclusions,the policy enlightenment to us is that the first task of the coordination of fiscal and monetary policies under the treasury cash management is to smooth the volatility of the fund,and to shift the role of the treasury to the fiscal and monetary policy from the“reservoir” to the “channel” role.This is consistent with the pursuit of the lowest cash holdings in treasury cash management.Therefore,implementing a target balance management system for the bottom balance will contribute to the construction of a compatible treasury cash management system.Second,the target balance management system aims to iron out the fund fluctuations at the bottom of the fund and maintain the bottom fund level at the lowest level.Therefore,how to determine the minimum cash balance at the bottom of the treasury is the key to building a compatible treasury management system.The traditional literature mainly estimates the minimum cash holding scale based on two classical models of the Baumol model and the Miller-Orr model or related extension models.The core idea of the classic model is based on the optimization of opportunity cost and transaction cost.However,the classical model has the disadvantages of over-idealization and narrow applicability.For example,in the classic model,the opportunity cost often chooses the securities as a substitute,ignoring the reality that only a commercial bank can save a model,so the actual result is measured.The meaning is questioned.This paper proposes a measurement method suitable for China's current situation from the perspective of risk management,that is,using the value-at-risk(VaR)method to determine the minimum size of the fund.This chapter aims to present a methodology that provides a reference for treasury managers to determine the core indicators of target balance management.Third,on the basis of the management of the target balance of the bottom of the library,the treasury funds need to maintain the bottom line target balance and achieve the performance target of the treasury fund through marketization.This paper analyzes the mechanism of the marketization of treasury funds and fiscal and monetary policy under the CC-LM framework.And through the construction of VAR model,the impact of Treasury fund commercial bank deposit on fiscal and monetary policy is tested empirically.The study found that the treasury fund commercial bankdeposits acted on the central bank's balance sheet through the reserve,which led to a decline in the supply of the base money;but the positive impact on the currency was greater,leading to an increase in the broad money supply.At the same time,the impact of Treasury fund commercial bank deposits on fiscal expenditures and output is not obvious,but it has a negative impact on interest rates,which makes interest rate levels lower.The marketization of treasury funds has a significant impact on the intermediate variables of the currency.Therefore,the key to the coordination between treasury cash management and fiscal and monetary policy is to strengthen coordination and cooperation in liquidity management and interest rate management,so that the treasury plays the role of “channel” on the one hand.On the other hand,the “regulator” effect of fiscal policy on monetary policy can be achieved through coordination between cash management and monetary policy.