A Study On Local Treasury Cash Management

From reform and opening up, our national economy keeps fast yet steady development, especially after the implementation of Tax Sharing System in 1994. The state revenue increases rapidly. Since the reform of modern treasury management, we spends ten years in establishing overall budget units covering county level and above, which contains general budgetary revenue in local finance, government budgetary fund ,extra-budgetary fiscal special accounts and the system of all fiscal treasury single account. The system of centralized collection and payment by the treasury functions as follows, the state revenue is turned in the treasury by modern economic payment from commercial banks, while the expenditure is paid to goods or service providers and ultimate expenditure spenders through treasury single account. The realization of the system has changed the payment pattern of traditional fiscal fund, gradually deleted all transitional accounts, and maximally reduced financial deposition and turnover of capital. It collets the capital in the treasury account which saved in budgetary unit in all levels. And thus, the amount of treasury capital increases a lot. With the application of dynamic monitor system of centralized collection and payment by the treasury, the department of finance has strong ability in controlling and predicting the capital use by budgetary units, which guarantees the safety of treasury cash management. It has become an urgent need and problem remaining unsolved of diffident levels of department of finance that how to operate the state treasury funds scientifically and increase the value while guaranteeing its safety. In May of 2006, the Ministry of Finance and the People's Bank of China together published Temporary Methods on Management of Central State Treasury Cash, which starts the management of treasury cash by the central government. As for local government, the management of treasury cash is still in the process of theoretical research.The thesis analyzes the status quo of management of local treasury cash and explains its essentiality. Firstly, the author learns from the successful experience of treasury cash management from developed countries, and then analyzes the guidance to local treasury. Secondly, according to analyze the situation of local financial revenue and reform of treasury management, the author submits the practical report of implementation of treasury capital management in provincial department of finance. Thirdly, the author takes the financial operation of an eastern coast city as an example to make the following research including the analysis of movement of treasury cash flow and main affecting factors and research on prediction diagram of cash flow. This aims at realizing the prediction and management of treasury cash flow in a particular period. Fourthly, through the above analysis, the author summarizes the principle and original operational procedures of local treasury cash management. At the end, the author raises the solution to integrate the treasury cash management and reduce the risk of operating treasury cash by local department of finance.