Open market operation is the most important monetary policy tool, because it is the main determinant of interest rate and high-energy currency changes. There are two types of open market operation:
1. Active open market operation: actively changing the deposit reserve and high-energy currency level.
2. Defensive open market operation: passively offset other factors that affect the change of deposit reserve and high-energy currency.
Open market operation:
Open market operation is the main monetary policy tool for the central bank to handle the base currency and adjust the market liquidity. The central bank conducts securities and foreign exchange transactions with market counterparties to achieve the goal of monetary policy regulation. China's open market operation includes RMB operation and foreign exchange operation.
[1] According to the development of the economic situation, when the central bank thinks it is necessary to tighten the money supply, it will sell securities and recover part of the base currency accordingly, reducing the amount of funds available to financial institutions;
On the contrary, when the central bank thinks it is necessary to loosen monetary policy, it will buy securities to expand the supply of base money and directly increase the amount of funds available to financial institutions.
The People's Bank of China began to establish the first-class dealer system for open market operation in 1998, and its scale has gradually expanded. It has become one of the main tools for the daily operation of the monetary policy of the People's Bank of China, which has played a positive role in adjusting the liquidity in the banking system level, guiding the interest rate trend in the money market and promoting the reasonable growth of the money supply. In 219, there were 49 primary dealers involved in open market operations.
Open market operation has become one of the important monetary policy tools in China.
Features:
Compared with other monetary policy tools, open market operation has the characteristics of initiative, flexibility and timeliness.
1. The scale of open market operation can be fully controlled by the central bank, which has considerable initiative;
2. The open market operation is flexible, buying more and selling less, selling more and buying less can be done, and the money supply can be "fine-tuned" or greatly adjusted, which has great flexibility;
3. The open market operation has strong timeliness. When the central bank sends out the intention to buy or sell, the transaction can be executed immediately, and the excess reserves of financial institutions participating in the transaction will change accordingly;
4. The open market operation can be carried out frequently and continuously, and if necessary, it can be reversed, from buying securities to selling securities, so that this policy tool will not cause great fluctuations in the whole financial market.