On November 9, the Ministry of Finance and the People’s Bank of China signed the Master Agreementon Commercial Bank Time Deposit for Central Treasury Cash Management. The qualified institutions who intend to take part in the commercial bank time deposit for central treasury cash management, including the qualified book-entry treasury bond underwriters, bearer’s treasury bond underwriters and open market operation primary dealer commercial banks, took part in the signing ceremony.
Since 2004, in order to implement macro-economic management policies and deepen the centralized collection and payment system reform of central treasury, and under the leadership of the State Council, the Ministry of Finance and the People’s Bank of China have, based on international experience and research on the framework of central treasury cash management that suits the Chinese situation, formulated and released the Provisional Regulation on Central Treasury Cash Management and the Operational Rules on Commercial Bank Time Deposits for Central Treasury Cash Management, putting in place a central treasury cash management institutional framework and laying afoundation for central treasury cash management. At present, cashmanagement operations take the form of commercial bank time deposit and government securities buy-back, with the former being the dominant pattern. Gradually, and with the accumulation of experience, repo and reverse repo of government securities will be included in the central treasury cash management operations.
Central treasury cash management is a major event in the fiscal and financial reform in China. Cash management will help further deepen centralized collection and payment reform of central treasury, enhance the efficiency oftreasury fund management; promote the coordination between fiscal policy and monetary policy for the benefit of better monetary policy transmission; help commercial banks strengthen fund management and financing with a view toraising efficiency. Therefore, it is of special significance to launch central treasury cash management in the first year of the Eleventh Five-Year Planperiod.
The People’s Bank of China has required the relevant commercial banks to participate in the cashmanagement operations in strict accordance with the regulations, and promote the implementation of monetary policy measures aimed at macro-economicmanagement; and honestly abide by the Master Agreement in management and operation to prevent risks and accept supervision
