The Rationality Of Central Bank Bills

Since played a role in the open market operations in the September in 2002, the central bank bills has being a more and more important tool, In 2003, the people's bank of China started to issue the central bank bills, and made it as a tool for open market operations, and issued three-month period central bank bills and one-year period central bank bills. At present, the central bank bills has scaled as 3446800,000,000￥, insist of three-month, six-month, one-year and three-year.On eighth in August in 2010, the people's bank of china issued the central bank bills of three-year period once again, after stopping it for twenty-two months. Meanwhile, the central bank issued the three-month period central bank bills. In general, the people's bank of china operates the central bank bills in the open market no less than twice once a week. In contrast, the people's bank of china operates the government bonds in the open market much less. This shows that the central bank bills are the leading tool in the open market operations of the people's bank of china at present.Depkiahf, central bank's tool for open market operations are government bonds including state government bonds, central bank bills, and financial bonds. Some countries, such as Japan, had ever used the central bank bills as an open market operation tool. However, it was finally replaced by the government bonds. Differently, at the beginning of Chinese people's bank's open market operations, the national debt and the exchange were made as the main tools for open market operations. However, due to the fail of government bonds'issuing this year, they did not go far on the way. In 2002, the people's bank of china faced a dilemma, in which, on the one hand, too much m0 need hedging; on the other hand, no bills at hand was in available to handle it. In September, the Chinese people's bank transferred all the sell repo into the central bank bills. In 2003, the people's bank of china started to make use of the central bank bills in the open market operations. At present, the size and species of the central bank bills have already increased a lot, which says that the central bank bills is fit to be a tool for open market operations.Overall, the Central bank bill as a tool of open market operations is effective in our country. Why is it? The paper aims to get the evidence.The article divides into six sections.The first part introduces this problem, and the purposes of the research, and the way used in the research, and the structure, and the advantages and the disadvantages.The second part introduces the development of the open market operations, making a summary of the tools for the open market operations internationally at home and abroad, and relating economical environment.The third part analyses how the central bank gets the object through the open market operations. That is to say, how the central bank achieves the aim of monetary policies through the open market operations on the m0, interest rate and ml.The fourth part compares the central bank bills with the government bonds on the economical environment and their functions, then help to choose the better.The fifth part empirically analyzed the availability of the central bank bills being a tool of the open market operations, using the VAR model, the impulse response function and the variance decomposition function and so on.The sixth part concludes that the central bank bills is an effective tool for the people's bank of china's open market operations, and makes the subsequent research direction.The methods used in the research:first, the author reviews the methods used in the relating research before, in which granger causality tests and analyses on the deputy are the most widely used. But they neglected that the central bank bills and the objective variables are in the same system. On this basis, in the article, the VAR model will be used.This feature of the paper:according to Chinese current economic and financial environment, the central bank bills is the nature of the open market operations tools. Besides, by the positive analysis of the central bank bills, it is effective. So, we can say that the central bank bills as the open market operations is reasonable.