The Research Of Chinese Treasury Bond Market

Modern Chinese Treasury bond market has been initiated in 1981. In past twenty years its development has experienced three stages: 1. immature over the counter market for voucher-form treasury bond 2. Shanghai exchange treasury bond market 3. mature over the counter interbank Treasury bond market. In last five years, Chinese Treasury bond market has entered into a very healthy development times. Particularly it has gained great achievement in interbank market. It also plays a significant role in following aspects: 1. operation and transmission system of money policy for center bank 2. implementation of proactive fiscal policy 3. expansion of money supplying source for political bank 4. improving structure for commercial bank.Treasury bond market not only provides place for Center Bank developing public market operation, financial institutions managing working capital and investor participating bond market, but also create engine for economic development. Financial market has developed very fast in along with the economic development. Recently China has joined WTO, Chinese capital market must be internationalized, same as interest rate should go to market as well. Under this circumstance, our Treasury bond market exits lots of shortfalls which impede further development for this market. In this essay, combining with the experience in developing country' s experience, it analyses some challenges which confronted Chinese bond market, such as liquidity in the interbank market has yet to be improved, duration in bond products are yet to be rational, a sound yield curve is yet to be take shape, the separation between exchange and interbank yet to be broken. In order to solving above issues, this essay suggests that it should develop market maker system to increase market liquidity; manage balanced treasury bond; issue short and long term treasury bond in proportion to improve duration and yield curve; develop bond derivative products such as future trading, open style repurchasement, so it can provides tools for risk protection. Hope this essay not only helps development in our Treasury bond market, but also makes contribution in our economic development.