Pan Gongsheng, governor of the Chinese central bank, People’s Bank of China, dismissed the idea that its bond trading is a form of massive monetary easing.
What Happened: Gongsheng clarified that the bond trading would be a liquidity management tool involving both buying and selling, the Wall Street Journal reported on Wednesday. The PBOC and the finance ministry are exploring ways to incorporate treasury bond trading into their policy toolkit.
He emphasized that this practice would not be equivalent to quantitative easing, a strategy where monetary authorities acquire assets like government bonds to reduce yields after exhausting traditional policy tools.
The PBOC’s bond trading will be a gradual process, and the issuance pace, maturity structure, and custody mechanism for China’s treasury bonds will also need to be optimized, Gongsheng added.
Speculation about ...