By Li Yang
BEIJING, Sept. 18 (Xinhuanet) --The operation in the management of treasury cash , which used to be on a small scale, is now becoming an important tool for the operations in the open market used by the Chinese central bank. Since Oct 25th 2011, the amount of the time deposits in the commercial banks for the central bank’s management of treasury cash has been doubled, from RMB30 billion to RMB60 billion. Meanwhile, the frequency of operations has also been greatly increasing. Taking the various changes in the central bank bills, the credits, the interest rate, the foreign currency reserves and the exchange rates into consideration, we can see that Chinese macro-economic policies are becoming more flexible and farsighted, said Li Yang, the vice president of the Chinese Academy of Social Sciences.
The recent changes in the operations for the management of treasury cash , which deserves more attention than the central bank bill, have also attracted great attention from the markets, said Li Yang on a financial forum on November 26th. Apart from the sudden and sharp increase in its scale, the frequency of the operations has also been increasing significantly. Before October 2011, the frequency of the commercial bank deposit bidding by the central bank in the management of treasury cash was once a month. Since the 9th bid on Oct 25th, however, it has been shortened to about once every 15 days. The 11th bid was on Nov 29th.
The violent fluctuations in the treasury fund are smoothed through the operations in the management of treasury cash to ease their shocks to the monetary policies, which ensure that the fiscal and monetary policies can be carried out smoothly, said an informant of the central bank. In fact, the operations can both increase the efficiency of the uses of the treasury fund in the central bank and improve the coordination between the fiscal policies and monetary policies, which is seen by Li Yang as very important. In addition, Li argued that it is indeed necessary for China to cope with the present complicated situation through the operations.
When he was talking about the unprecedented and long-lasting devaluation of RMB, which happened recently outside China, Li said it remains to be seen whether it is the start of a new trend. He believed, however, given that the foreign currency reserve or at least their growth rate is decreasing , both the exchange rate of RMB and the contribution made by China's export-oriented sectors to the growth of the national economy might have entered a “new historical period".
The new trend of the exchange rate of RMB would be "fluctuating in a two-way track and increasing or reducing in an orderly and controlled way", which would give China more financial autonomy, Li explained further. He also emphasized that we should always pay attention to the equilibrium rate of exchange when we are considering the issue of the exchange rate. He preferred to agree that the exchange rate of RMB is approaching an equilibrium level, and thus the accusations against China by the US on the issue of the exchange rate make no sense at all.
(Source:Cssn.cn)
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