On October 9th, a report from the People’s Bank of China (PBOC) revealed the establishment of a joint task force with the Ministry of Finance. This initiative is designed to embody the principles set forth during the Third Plenary Session of the 20th Central Committee of the Communist Party and to meet the directives from the Central Financial Work Conference, which emphasized the need for an expanded toolkit for monetary policy. One of the key strategies includes gradually increasing the trading of government bonds in the central bank’s open market operations.
The inaugural meeting of this task force recently took place, featuring notable attendees such as Xuan Changneng, a member of the PBOC Party Committee and Vice Governor, along with Liao Min, a member of the Ministry of Finance Party Leadership Group and Vice Minister. During the session, both leaders underscored the importance of their ongoing collaboration in the central bank’s trading of government bonds and laid out the operational mechanisms for the task force. They also shared insights on the functioning of the bond market.
There was a consensus on the vital role that the central bank’s trading of government bonds plays in enhancing the monetary policy toolkit and improving liquidity management. Looking ahead, the focus will be on achieving a balance between development and security, while continuing to promote policy coordination. Their goal is to refine the institutional arrangements related to this initiative and ensure the stable development of the bond market, thus fostering a conducive environment for the central bank’s bond trading activities. Officials from the relevant departments of both the PBOC and the Ministry of Finance were also involved in the discussions.
