MNI BRIEF: Conditions For PBOC Bond Trading Are Maturing - Pan
MNI (SYDNEY) - China's central bank believes conditions for buying and selling treasury bonds are maturing and officials will work gradually to introduce trading into their toolkit, said Governor Pan Gongsheng on Tuesday.
The treasury yield curve suffered from insufficient long term pricing and stability, Pan continued.
The bond market’s recent downward trend was partly due to the PBOC guiding market interest rates down, the slow supply of government bonds earlier in the year, and poor risk awareness from small- and medium-sized banks.
Pan said the central bank had issued risk warnings and strengthened market communication to curb potential systemic risk from unilateral downward long-term treasury yield trends caused by the herding effect.
The PBOC will step up investigations into irregular behavior in China’s interbank bond market to curb systemic risks, Pan added.