The Study Of China's Bond Repo Market And Benchmark Interest Rate

For a long time, Deposit and Loan Interest Rate has played a role as Benchmark Interest Rate(BIR)in China. However this situation renders little agility to the money supply. In the first half year of 2007, central bank made relevant prescripts: ShangHai Inter-Bank Offered Rate (SHIBOR) will be fostered into BIR. Unfortunately, the appearance of SHIBOR does not mean Inter-Bank Offered Rate (IBOR) will necessarily become BIR in China's monetary market. From the long consideration, there are undoubtedly certain problems encountering the being BIR of IBOR, such as deficiency of credit, inadequate scale, and lack of variety of participants. Through the comprehensive comparison, technically, Bonds Repo Rate (BRR) suits the position of BIR much better.The data of Treasury Bonds Repo (TBP) scale, BRR and IBOR are collected from universities'databases, and the paper analyzes the possibility of BRR to be BIR by using Correlation model. On the other hand, this paper studies current condition of our TBR market, and points out problems that prevent BRR from becoming the BIR, such as severe market disintegration, market scale shortage, trade amount and mobility shortage, failure of TBR's institution in exchanges, and weaken function of conducting the monetary policy in TBP market. Furthermore, a series of policy suggestions ,which could facilitate BRR to be the BIR, are proposed, such as establishing the unified the TBP market, extending Treasury bond issue scale, consummating the TBR's institution, strengthening the function of conducting the monetary policy in TBP market, and setting up entrusted financing organizations.