CCB Beijing, July 3 news On July 2, the People’s Bank of China WeChat public account published an article signed by Pan Gongsheng, Deputy Governor of the People’s Bank of China. Pan Gongsheng said that by the end of May 2022, the total size of my country’s bond market reached 139 trillion yuan, ranking second in the world. Next, the People’s Bank of China will build an efficient and connected multi-level market system, cultivate a diversified team of qualified investors, consolidate the legal basis of the bond market, continue to promote high-level financial opening to the outside world, and promote the high-quality development of China’s bond market.
The total size of China’s bond market ranks second in the world
Pan Gongsheng pointed out that China’s bond market has experienced a tortuous development process. With the deepening of reform and opening up, the development of my country’s bond market focuses on absorbing international experience and combining national conditions, following the objective laws of market development, mainly targeting qualified institutional investors and relying on the over-the-counter market. The restraint mechanism has stimulated the vitality of the market itself, and achieved good development results.
First, the scale has grown steadily, and the financing function has been continuously enhanced. As of the end of May 2022, the total size of my country’s bond market reached 139 trillion yuan, an increase of 4.3 times compared with the end of 2012, ranking second in the world. Among them, the scale of corporate credit bonds is 32 trillion yuan, ranking second in the world, and it is the second largest financing channel for the real economy after credit.
Second, the market structure is improving day by day. In terms of bond varieties, it covers government bonds, financial bonds, corporate credit bonds, asset securitization products and other varieties. In recent years, the bond market has also launched a variety of special bonds such as green, poverty alleviation, rural revitalization, “mass entrepreneurship and innovation”, and epidemic prevention and control, which have played an important role in green transformation, epidemic prevention and control, and inclusive finance. From the perspective of investor structure, it covers more than 3,800 institutional investors including domestic banks, insurance, securities, funds, trusts, wealth management and overseas central banks, sovereign wealth institutions, international organizations, and financial institutions.
Third, positive progress has been made in the construction of the market legal system and infrastructure system. In 2012, the State Council deployed the People’s Bank of China to lead the establishment of an inter-ministerial coordination mechanism for corporate credit bonds. All departments strengthened coordination and cooperation, unified the basic rules of bond market information disclosure, default handling and credit rating, and established a unified law enforcement mechanism in the bond market. In 2021, the People’s Bank of China and relevant departments will jointly formulate guidelines for promoting the high-quality development of the reform and opening up of the corporate credit bond market, and clarify the direction and measures for the next stage of reform. At present, my country has formed a relatively complete bond market infrastructure system, such as the early realization of the paperless bond, the establishment of a bond registration and custody system, the implementation of the whole market Voucher versus Payment (DVP) settlement, and the establishment of an independent central counterparty clearing agency. Wait. After deliberation and approval at the 10th meeting of the Central Committee for Comprehensively Deepening Reforms, the People’s Bank of China, together with relevant departments, jointly issued a work plan for the overall supervision of financial infrastructure, and in accordance with the requirements of the Fifth National Financial Work Conference, actively promoted the interconnection of financial infrastructure in the bond market to promote Free flow of market factors.
The fourth is to build a market-based and legal-based default risk disposal mechanism. Since the bond market broke the rigid payment and gradually normalized in 2014, the People’s Bank of China, together with the National Development and Reform Commission, the China Securities Regulatory Commission and other departments, continued to strengthen the construction of relevant mechanisms, and promoted the establishment of a bond default disposal framework that combines judicial, administrative and self-discipline. Market-oriented and law-based ways of dealing with breach of contract have been continuously enriched, and judicial relief channels have gradually become smoother. The People’s Bank of China, the State-owned Assets Supervision and Administration Commission, and the China Securities Regulatory Commission have jointly established a central and local level monitoring and early warning mechanism for state-owned enterprise bond defaults to increase regulatory synergy and risk prevention and control.
The opening up of the bond market to the outside world is steadily advancing
Promoting the opening of the bond market is an inevitable requirement for my country to build a market-oriented and open financial market system. Over the years, the bond market has adhered to the principle of gradual and controllable opening, balancing efficiency and safety, and paid attention to top-level design and overall arrangement, and has made great progress.
First, the types of investors have been continuously enriched, and the number has grown steadily. In 2005, the International Finance Corporation and the Asian Development Bank were allowed to issue RMB bonds in the interbank bond market, and the Pan-Asian Fund and the Asian Debt Fund began to invest in the market. In 2010, the scope of foreign institutional investors that could enter the market was expanded to include overseas central bank institutions, overseas RMB clearing banks and participating banks. In 2016, it was further expanded to include overseas licensed financial institutions and medium- and long-term institutional investors such as pension funds. As of the end of May 2022, there were 1,038 overseas institutions entering the inter-bank market, covering more than 60 countries and regions including the United States, Canada, the United Kingdom, France, Germany, Italy, Japan, Singapore, and Australia.
Second, the mainland and the global bond market are connected in an orderly manner. In July 2017, in accordance with the decision and deployment of the Party Central Committee, the northbound opening of “Bond Connect” was successfully implemented. “Bond Connect” not only pays attention to adopting international common practices such as multi-level custody, and effectively facilitates “one-point access” for overseas institutions through the connection of the infrastructure systems of the two places, but also fully considers my country’s national conditions. A series of arrangements such as information collection can effectively support supervision and risk prevention. In September 2021, the opening to the south was also successfully implemented. As of the end of May 2022, the scale of foreign institutional investment in my country’s bonds was 3.74 trillion yuan, an increase of 2.81 trillion yuan compared with before the launch of “Bond Connect”.
Third, the influence of the bond market has been significantly enhanced, and the resilience of the financial system has been continuously enhanced. Since 2018, my country’s bond market has been included in the three major international bond indices of Bloomberg Barclays, JPMorgan Chase and FTSE Russell. This reflects the confidence of global institutional investors in the long-term healthy development of China’s economy, the continued expansion of financial opening up, and the holding of RMB assets. In May 2022, the International Monetary Fund decided to increase the weight of RMB in the SDR basket from 10.92% to 12.28%. The weight of RMB ranks third after the US dollar and the euro. Although affected by various factors, the volatility of the international financial market has increased recently, but my country’s bond market and foreign exchange market have generally remained stable and have withstood a “stress test”, which not only reflects that China, as a large open economy, is dealing with external The size advantage in terms of impact also fully reflects the deepening of the market-oriented reform of interest rates and exchange rates, and the steady and prudent promotion of the opening up of the financial market, which has made my country’s financial system more resilient, and also helped to boost foreign investors’ willingness to open up my country’s financial market. confidence.
The fourth is to gradually shift from a flow-based opening of factors to a system-based opening such as rules. In recent years, the People’s Bank of China, together with all parties, has actively responded to the reasonable demands of the market, and successively issued a series of powerful policy measures and optimization measures to promote the market rules and systems such as issuance and trading, registration and settlement, and rating to be more in line with international standards. In May 2022, on the basis of years of experience in multi-level custody of bonds such as over-the-counter bonds, cross-market transfer custody, and “Bond Connect” in domestic commercial banks, the People’s Bank of China, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued an announcement to unify foreign institutional investors. Policy requirements for entering the Chinese bond market. Recently, the People’s Bank of China and Hong Kong regulators are promoting the further opening of the interest rate derivatives market to provide effective interest rate risk hedging tools for overseas institutional investors.
Focusing on building a new development pattern, continue to promote the high-quality development of China’s bond market
In the next stage, the People’s Bank of China will continue to solidly promote the reform and opening up and high-quality development of China’s bond market, and provide strong support for accelerating the construction of a modern economic system and a new development pattern.
The first is to build an efficient and connected multi-level market system and cultivate a diversified team of qualified investors. Accelerate the promotion of the orderly connection of bond market infrastructure and realize the free flow of factors. Steady development of the over-the-counter bond business of financial institutions to meet the diversified investment and financing needs of the market. Strengthen institutional innovation and product innovation in the bond market, and improve the coverage and inclusiveness of the bond market. In accordance with the principle of co-construction and sharing, build a total transaction report database covering the whole market. According to risk identification and ability to bear, strengthen access management and improve the investor suitability system.
The second is to consolidate the legal basis of the bond market, strengthen supervision coordination, and strengthen risk prevention and control. Promote the improvement of the “Company Law”, “Securities Law”, “Enterprise Bankruptcy Law” and “People’s Bank of China Law” and other laws to consolidate the foundation of higher laws. Research and formulate the “Corporate Bond Management Regulations”, in accordance with the principle of classification and convergence, unify various systems and implementation standards, and clarify the issuance and transfer, information disclosure, investor protection, legal responsibility, etc. of non-publicly issued corporate credit bonds. Strengthen the tracking, monitoring and information sharing of abnormal market transactions, default risks, and overall leverage ratios, and promote early identification, early warning, and early disposal of risks. Strengthen the supervision of information disclosure, improve the quality of credit ratings, and promote risk disclosure and risk pricing. Improve and implement a market-oriented and legal-based default disposal mechanism to improve the efficiency of risk clearing.
The third is to continue to promote high-level financial opening to the outside world. Benchmarking with international standards, taking into account my country’s practice, constantly improve the institutional system and supervision model, and further comprehensively promote the transition of the bond market from the opening of the flow of factors to the opening of rules and other institutions. Adhere to the overall national security concept, improve macro-prudential management, strengthen the supervision of cross-border capital flows, conduct real-time monitoring of market operations, build a systemic risk monitoring, assessment and early warning mechanism, and promote the reform and opening up and high-quality bond market on the basis of ensuring financial security. develop.Return to Sohu, see more
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