Overview of national debt
National debt, also known as national debt, is a creditor-debtor relationship formed by the state on the basis of its credit and in accordance with the general principles of debt.
National debt is a bond issued by the state, and it is a bond issued to raise financial funds. It is a debt certificate issued to investors and promised to pay interest and repay the principal within a certain period of time. Because the issuer of national debt is the country, it has the highest credit and is recognized as the safest investment tool.
National debt is the main form of national credit. The purpose of issuing treasury bonds is often to make up the national fiscal deficit, or to raise funds for some expensive construction projects, as well as some special economic policies and even wars. Because the national debt takes tax as the guarantee of debt service, it has low risk, strong liquidity and lower interest rate than other bonds.
China's national debt refers to the national debt issued by the representative of the Ministry of Finance, which is guaranteed by the national financial reputation and has a high reputation. It has always been called "Phnom Penh bond", and cautious investors like to invest in government bonds. National debt can be divided into voucher-type national debt, physical national debt and book-entry national debt.
Main characteristics of national debt
National debt is a special form of debt, which has the following characteristics compared with the general creditor-debtor relationship:
(1) From the subject of legal relationship, the creditors of national debt can be citizens, legal persons or other organizations at home and abroad, and they can also be international financial organizations in a certain country or region, while the debtors can only be countries.
(2) From the nature of the legal relationship, the occurrence, change and elimination of the legal relationship of national debt mostly reflect the unilateral will of the country. Although the legal relationship of national debt is equal to other financial legal relationships, it shows a certain subordinate relationship compared with the general creditor-debtor relationship, which is more obvious in the legal relationship of national debt.
(3) From the realization of legal relationship, national debt belongs to the creditor-debtor relationship with the highest credit rating and the best security.
The purpose of issuing national debt
The issuance of treasury bonds has the following purposes:
1. Issue war bonds to raise wartime military expenditure. During the war, the amount of military expenditure was huge, and in the absence of other financing methods, funds were raised by issuing war bonds. Issuing war bonds is a common way in wartime and the earliest origin of national debt.
2. Issue deficit bonds in order to balance the national fiscal revenue and make up the fiscal deficit. Generally speaking, fiscal revenue and expenditure can be balanced by increasing taxes, issuing additional currency or issuing government bonds. Compared with the above three methods, it is a good way to increase taxes from the people, but the tax increase has certain limits. If the tax is too heavy and exceeds the affordability of enterprises and individuals, it will not be conducive to the development of production and will also affect future taxes. Issuing additional currency is the most convenient way, but it is also the least desirable, because using additional currency to make up the fiscal deficit will lead to serious inflation and the most serious impact on the economy. It is still a feasible measure to make up the fiscal deficit by issuing government bonds when it is difficult to increase taxes and issue additional currency. By issuing bonds, we can absorb idle funds from units and individuals and help the country tide over financial difficulties. However, the circulation of deficit national debt must be moderate, otherwise it will also cause serious inflation.
3. The state issues construction bonds to raise construction funds. The country needs a lot of medium-sized capital for the construction of infrastructure and public facilities. By issuing treasury bonds, part of short-term funds can be converted into medium capital, which can be used for the construction of large-scale national projects and promote economic development.
4. Repay the due national debt and issue bonds. At the peak of debt repayment, in order to solve the problem of the source of funds for debt repayment, the state issues borrowed and exchanged treasury bonds to repay the old debts due. "This can reduce and disperse the country's debt service burden.
Classification of national debt
] According to different standards, national debt can be divided into the following categories:
1. According to the different ways of borrowing debts, national debt can be divided into national bonds and national loans.
National debt is the legal relationship of national debt formed by issuing bonds. National debt is the main form of domestic debt, and the national debt issued in China mainly includes national debt, national economic construction bonds and national key construction bonds.
State loan is a legal relationship between borrowers and borrowers through negotiation and signing agreements or contracts according to certain procedures and forms. National borrowing is the main form of national foreign debt, including foreign loans, loans from international financial organizations and loans from international commercial organizations.
2. According to the different repayment periods, national debt can be divided into fixed-term national debt and irregular national debt.
Term treasury bonds: refers to the treasury bonds issued by the state with strict repayment terms. According to the length of repayment period, fixed-term treasury bonds can be divided into short-term treasury bonds, medium-term treasury bonds and treasury bonds.
Short-term national debt usually refers to the national debt issued within 1 year, which is mainly used to adjust the temporary surplus and deficiency of the national treasury and has great liquidity;
Medium-term national debt refers to the national debt with a maturity of more than 1 year and less than 1 year (including1year but excluding1year), which can make the country's use of debt funds relatively stable because of the long repayment time;
National debt refers to the national debt with a maturity of more than 10 years (including 10 years), which can control financial resources for a longer period of time, but the holder's income will be affected by currency value and price.
Irregular national debt: refers to the national debt issued by the state without a specified repayment period. The holder of this national debt can get interest on schedule, but has no right to demand repayment of the debt. For example, the permanent national debt issued by Britain belongs to this category.
3. According to different issuing areas, national debt can be divided into domestic debt and foreign debt.
Domestic debt: refers to the national debt issued in China, the creditors of which are mostly citizens, legal persons or other organizations, and the principal and interest are paid in domestic currency.
National foreign debt: refers to the debts borrowed by the state abroad, including national debt issued in the international market and loans from foreign countries, international organizations and other non-sexual organizations. A country's foreign debt can be raised by mutual agreement in the currencies of creditor countries, debtor countries or third countries to repay the principal and interest.
4. National debt can be divided into national debt and compulsory national debt according to the nature of issuance.
National debt, also known as arbitrary national debt, refers to the national debt voluntarily issued by citizens, legal persons or other organizations. It is a common form of issuing national debt in contemporary countries, which is easily accepted by buyers.
Compulsory national debt is the national debt that the state forces citizens, legal persons or other organizations to buy by virtue of its power and according to the prescribed standards. This kind of national debt is generally used in wartime or when there are financial and economic difficulties or when specific policies are implemented and specific goals are achieved.
5. According to different purposes, national debt can be divided into deficit national debt, construction national debt and special national debt.
Deficit national debt refers to the national debt used to make up the fiscal deficit. In countries with a budget system, the national debt included in the regular budget belongs to deficit national debt.
Construction national debt refers to the national debt used to increase national investment in the economic field. In countries that implement the budget system, the national debt included in the capital (investment) budget belongs to the construction national debt.
Special national debt refers to the national debt issued to implement special policies within a specific scope or for a specific purpose.
6. According to whether it can be circulated, national debt can be divided into upper national debt and lower national debt.
Shanghai government bonds, also known as negotiable bonds, refer to government bonds that can be traded on the stock exchange.
No national debt, also known as non-national debt, refers to non-national debt. This kind of national debt generally has a long term and high interest rate, and is mostly issued by registered method.
Classification of national debt in China
From the form of bonds, bonds issued in China can be divided into voucher bonds, bearer bonds and book-entry bonds.
Certificate-based national debt is a kind of national savings bonds, which can be registered and put on record. The creditor's rights are recorded in the "voucher-type treasury receipt", which cannot be circulated, and interest will be calculated from the date of purchase. During the holding period, if the holder needs to withdraw cash under special circumstances, he can redeem it at the purchase outlet in advance. When redeeming in advance, in addition to repaying the principal, the interest will be calculated according to the actual holding days and the corresponding interest rate grade, and the handling agency will charge a handling fee of 2‰ of the principal.
Bearer (physical) national debt is a kind of physical bond, which records the creditor's rights in the form of vouchers, has different face values, is bearer, has no loss report and can be circulated. During the issuance period, investors can buy directly at the counter of the national debt institution. An investor who opens an account in a stock exchange can entrust the purchase of securities through the trading system. After the issuance period, the holders of physical coupons can withdraw them at the counter, or entrust them to the stock exchange for custody, and then withdraw them through the trading system.
Book-entry treasury bonds record creditor's rights in the form of bookkeeping, which can be issued and traded through the trading system of stock exchanges, and can be registered for the record. Investors dealing in book-entry securities must open an account in the stock exchange. Because the issuance and transaction of book-entry treasury bonds are paperless, it has high efficiency, low cost and safe transaction.
The role of national debt under market economy conditions
1. Make up the fiscal deficit
Making up the fiscal deficit is the most basic function of national debt.
Generally speaking, there are two reasons for the fiscal deficit: one is economic recession, and the other is natural disasters.
Once there is a fiscal deficit, we must find ways to make up for it. Under the current economic system, there are three main ways to make up for it: increasing taxes, issuing additional currency and borrowing national debt.
The first way not only can't raise a lot of money quickly, but also heavy taxes will affect the enthusiasm of producers, further shrink the national economy, narrow the tax base, and may make the deficit bigger.
The second way will greatly increase the money supply of society, lead to excessive inflation and disrupt the operation order of the whole national economy.
The third way is the most feasible way, because issuing treasury bonds to raise funds is only a temporary transfer of the right to use social funds. Under normal circumstances, it will not lead to excessive inflation, and at the same time, it can make up the fiscal deficit quickly, flexibly and effectively. Therefore, borrowing national debt is the most basic and commonly used way for countries around the world to make up their fiscal deficits.
2. Adjust the surplus and deficiency of seasonal funds in the budget.
The use of national debt can also flexibly adjust the seasonal surplus and deficiency of funds in the process of fiscal revenue and expenditure. 1 year, fiscal revenue often does not flow into the state treasury at a balanced rate, while fiscal expenditure often proceeds at a relatively balanced rate. This means that even if the annual budget is balanced, there will be considerable deficits in individual months. In order to ensure the performance of its functions, many countries will adopt short-term treasury bonds with a term of 1 year (usually a few months, and the longest is no more than 52 weeks) as a seasonal fund adjustment means to solve the temporary fund imbalance.
3. Macro-control the operation of the national economy
A country's economic operation cannot always be in a state of steady and sustained growth. On the contrary, due to macro-policy mistakes, international economic influence and other factors, economic operation often deviates from people's expected ideal track, leading to excessive economic expansion (serious inflation) and economic contraction (deflation). At this time, we must take corresponding policies and measures to intervene in the economy, so that the economic operation can return to an ideal or expected track. Since the establishment of Keynesian macroeconomic theory, it has become a common phenomenon to use economic policies to regulate macroeconomic operation, in which national debt plays a very important role. This also makes the macro-control function of national debt gradually become the main function of national debt.
Nature of national debt
The financial issuance of national debt is different from the bank's absorption of savings. The issuance of national debt in China has a strong administrative color from the beginning, and its significance is widely publicized, not its economic function and benefit. At the same time, in the issuance propaganda, the national debt is compared with bank savings, which confuses the difference between national debt and bank savings. In fact, national debt has always been similar to bank savings, and this problem does not want to be different from bank savings. Therefore, for many years, people have known that the difference between national debt and bank savings is only that the undertakers are different, that is, one is the bank and the other is the finance; Then, the issue rate of national debt is always higher than bank savings. In other words, the function of finance is different from that of banks, and the credit of finance is also different from that of banks. Therefore, the issuance of treasury bonds by the government can never be equated with the absorption of savings by banks.
Finance can neither provide savings services for the general public like banks, nor compete with banks for limited social savings. If we say that in the era when the national debt just came into being, that is, in the developed modern market economy, it is not allowed to confuse financial credit with bank credit, that is to say, the mechanism and significance of fiscal issuance of national debt must not be different from that of bank absorption of savings in principle. Defining the different nature of national debt and bank savings in theory is the cognitive basis for standardizing the issuance of national debt, and it is also a necessary prerequisite for perfecting the national debt market and giving full play to this role.
1, the issuance of national debt can play a special role in making up the gap between investment and savings in the operation of the national economy, while bank savings only absorb temporarily unused funds from the public.
Bank savings can play the role of converting savings funds into investment funds, and can also play the role of transferring realized consumption capacity, and transfer some people's deferred consumption funds to another people for actual consumption. This is the role of bank credit. In contrast, financial credit should not play the same role as bank credit. In essence, the financial issuance of treasury bonds should avoid being similar to bank savings, because as long as the issuance of treasury bonds is equivalent to bank savings, it is better to issue treasury bonds directly to banks. Under the condition of commodity economy, the basic requirement of national economic operation is that production equals consumption and investment equals savings, that is, consumption is less than production, social reproduction will shrink, investment is less than savings, and social consumption will be less than production, resulting in some social funds and production results being idle.
Therefore, the financial issuance of treasury bonds is different from the bank's absorption of savings, and its mechanism lies in that treasury bonds can balance investment and savings and make up for the investment gap. This is because under the current financial system, after banks absorb savings, they can't turn all the savings funds into investment funds except the actual consumption capacity, and they must keep some of them as reserves. In fact, the existence of this kind of reserve has formed an unbalanced gap between social capital investment and savings. In the modern market economy, the financial issuance of national debt is mainly aimed at this gap, that is, issuing bank reserves. Because national debt has the best reputation and the most convenient realization, it can play this special role like a bank. By issuing national debt to absorb savings, finance not only loses its special function, but also infringes on the social function of bank credit.
2. Issuing national debt is to exercise the economic management function of the country, while bank savings only show the existence of a financial credit relationship.
The economic construction that the country is engaged in is different from the general economic activities. Under the traditional system, China is centralized, that is, all economic activities are controlled by the state, which is the object of reform. At present, the market economic system is established and improved, and the economic construction that the state is responsible for is limited to non-competitive areas such as infrastructure, and generally does not involve the content of competitive areas. This is the application of the national economic management function.
The issuance of national debt is to play the role of this economic management function of the country. The state can effectively regulate the operation of the national economy by investing in national debt. Relatively speaking, the role of national debt is unmatched by bank savings. In the past, in China, calling for savings was also a kind of mobilization, which was the concrete embodiment of centralized economic system. People always emphasize that savings should be used to support national economic construction. Now, after the transition to the new economic system, the traditional concept has long changed, and bank savings have fallen back to the general market economy behavior, which only reflects the credit relationship between individuals and banks and has no significance of direct investment in national economic construction.
3. The interest rate of national debt should be the benchmark interest rate in the capital market, and bank savings can't play the role of this credit tool.
National debt is issued by finance and based on the national reputation, so it has the reputation of Phnom Penh bond. Relatively speaking, this is a credit tool with high security, huge scale and convenient realization. In other words, compared with the currency issued by the state, national debt is a kind of credit certificate second only to currency, which can almost play the role of quasi-currency. Because national debt has the strongest liquidity and the most convenient liquidity, the interest rate of national debt can only be the lowest among all credit instruments. Therefore, the interest rate of national debt should objectively play the role of benchmark interest rate. In the capital market, the standard market operation should maintain the benchmark interest rate position of the national debt interest rate, and any market credit relationship that cannot make the national debt interest rate the benchmark interest rate is bound to be irregular. Similarly, this credit function of national debt is not available in bank savings offices. Under the premise of the existence of national debt, the bank deposit interest rate should not and should not be allowed to become the benchmark interest rate unless the credit relationship in the financial market is distorted. That is to say, in real life, it is abnormal that the interest rate of national debt is higher than the bank deposit rate, which is an obvious manifestation that the issuance of national debt does not meet the requirements of the basic operation mode of modern capital market.
Issue national debt
1, issue price of national debt
Fair price problem. In other words, the issue price is equal to its face value. When the bond matures, the state will repay the principal and interest at this price.
Sell at a discount. That is, the issue price is lower than the face value of the bond. When the bond matures, the state needs to repay the principal and interest at face value. It is different from discount issue.
Premium issue. That is, the issue price is higher than the face value of the bond. When the bond matures, the state only pays the principal and interest of the face value of the bond.
2. Issuance of national debt
Public offering law. That is, issuing government bonds through public bidding in the financial market.
According to the subject matter of tender, the public tender for the issuance of national debt is divided into three forms: payment period, price and yield.
According to the bidding rules, there are unit price bidding (Dutch style) and multi-price bidding (American style).
Bearing method. That is, all the national debt is underwritten by financial institutions and then turned to the society, and the unsold part is borne by financial institutions themselves.
Law. That is, the marketing agency is entrusted to use the financial market to directly issue government bonds.
Payment and distribution law. That is, the expenditure corresponding to cash payment is changed to national debt payment.
Compulsory apportionment method. In other words, the state uses power to force citizens to buy government bonds.
sink a national debt
1, the way to repay the national debt
The method of gradual repayment in stages. That is, a national debt stipulates several repayment periods, and the principal is fully paid off when the national debt expires.
Revolving withdrawal and repayment method. That is to say, a certain proportion of national debt is determined to be repaid by drawing lots regularly according to the national debt code until the end of the repayment period, and all national debt is repaid by drawing lots.
One-time repayment at maturity method. In other words, the national debt is paid off in one lump sum according to the par value of the maturity date.
On-site purchase and sale compensation method. That is to say, the national debt is returned from the securities market, and even if it expires, it has been fully held.
Replace the old repayment method with a new repayment method. That is, by issuing new treasury bonds in exchange for expired old treasury bonds.
2, the source of funds to repay the national debt
Adopt the budget. The annual repayment amount of national debt is included in the expenditure budget of the current year as a financial expenditure item, and is guaranteed by the normal fiscal revenue.
Use fiscal surplus. When there is a balance in budget implementation, this balance will be used to pay the principal and interest of the national debt due in the current year.
Set up a sinking fund. Set up a special fund in the budget to repay the national debt, and set aside special funds from the fiscal revenue every year to set up a fund dedicated to repaying the national debt.
Borrow new debts to pay off old debts. By issuing new bonds, as a source of funds to repay old debts. The essence is the extension of the debt period.
Transformation of China's National Debt Issuance
During the period of issuing treasury bonds in different places, every year when the state issues treasury bonds, it must mobilize at different levels and even use administrative apportionment. After the issuance of government bonds has been fully staged, what people see is that the issuance of government bonds causes a big move in bank savings every year, and quite a few people take bank deposit certificates to buy government bonds. This phenomenon directly shows that the issuance of national debt in China is not standardized and does not conform to the nature of national debt. Therefore, on the basis of accurately defining the credit function of national debt, the following changes will be realized in the issuance of national debt in China in the future.
1, mainly for residents, mainly for financial institutions.
In order to make up the investment gap, the issuance of national debt must be mainly oriented to financial institutions. Since then, because China's national debt is mainly issued to residents, the special function of national debt investment has almost been abandoned, and the issuance of national debt is basically similar to the absorption of savings by banks. Moreover, in order to attract residents to buy government bonds, the interest rate of government bonds is always higher than the savings rate of banks, which correspondingly makes the interest rate of government bonds lose its position as the benchmark interest rate. Therefore, in order to standardize the national debt market, the most basic requirement is to change the issuing target, from mainly for individual residents to mainly for financial institutions, especially for major commercial banks. This change means that banks are no longer debt institutions, but the main force of national debt. In this regard, the suspension of the sale of government bonds by commercial banks to residents should be an obvious sign of the normalization of the government bond market in China.
2. From issuing bonds with the same kind of bank deposits to issuing bonds with different kinds of bank deposits.
At present, there is basically no difference between the types of national debt issuance and bank deposits. 1 year bonds, 2-year bonds, 3-year bonds and 5-year bonds correspond to the bank's 1, 2-year, 3-year and 5-year time deposits. With the change of the issuing object, the issuing varieties of national debt must also change. According to the needs of developing the open market business of banks, the treasury bonds issued by using the reserves of commercial banks should be short-term treasury bonds with a term of 1 year, that is, treasury bonds with a term of 4 weeks, 8 weeks, 3 months and 6 months. If the distribution object changes, from focusing on individual residents to focusing on financial institutions, and the distribution variety remains unchanged, then the change of distribution object is meaningless. In other words, the change of issuing varieties is related to the change of issuing objects, which is a changing relationship. As far as the national debt market is concerned, the issuing methods, issuing objects and issuing varieties must be standardized and in place, and both are indispensable. The determination of distribution type is set according to the needs of distribution objects. Specifically, the treasury bonds purchased by commercial banks with reserves can only be short-term treasury bonds. The United States is a country with a mature national debt management system, and the national debt issued to financial institutions is short-term national debt. The trend of China's national debt market is not unique, but following international practice and turning to issuing short-term bonds should be one of the important contents of market supervision.
In addition, national debt can not only be issued to financial institutions. When the main issue target is financial institutions, that is, commercial banks undertake the main task of purchasing government bonds, it is not excluded that the financial department can directly issue a small number of special types of government bonds to individual residents. These special types of national debt generally have a maturity of more than 10 years, up to 30 years. This is not in the variety of bank deposits, but the variety of national debt issuance is different from bank deposits. In some countries with a long history of issuing treasury bonds, most of them are issued to individual residents, avoiding treasury bonds with the same bank deposit period. This kind of national debt can be exempted from interest tax, and individual residents mainly use it as children's education expenses or personal assets reserves, which is very beneficial to stabilizing residents' lives. In order to change the types of national debt issued in China, we should not only issue short-term national debt of financial institutions, but also issue new individual national debt on the premise of canceling the same types of bonds as bank deposits.
3, from the entrusted bank to the individual residents and then to the financial sector to set up their own national debt issuers.
Since China's national debt is mainly issued to individual residents with a term of 1 year to 5 years, the financial department has to entrust the banking system to issue it on its behalf, and at the same time pay a high agency issuance fee. Major commercial banks are also aiming at this huge agency fee, and they are eager to move at the expense of blood. People withdraw money from banks because the interest rate of national debt is higher than that of bank savings, and debt interest's income is not taxed; Bank debt, because there is a fixed issue fee that can be recorded; It is profitable for both sides, but as far as society is concerned, it has paid unnecessary financing costs, because the money used for national debt has been well kept in the bank and can be used centrally by the society. There is really no need to make a trip in vain to increase interest and issuance costs. Therefore, after changing the issuing object, the national debt will no longer be mainly issued to individual residents, and the situation of bank savings moving will not happen again, and the history of issuing national debt by banks will end. Under this premise, the financial sector must establish its own permanent issuer. This kind of national debt issuer is different from the national debt management department in the period of administrative apportionment, and it is also different from the banking institution as an agent issuer, but a specific office directly under the financial department. It is not a commercial organization in itself, but only plays the role of issuing government bonds. The short-term bonds issued by this institution are for financial institutions, and the bonds issued are for individual residents, that is, not only for financial institutions, but also for individual residents, but mainly for financial institutions, and national debt for individual residents can also be issued by entrustment. So far, China's financial department has only set up a national debt management institution, but has not set up a special national debt issuing institution. However, in order to improve China's national debt market, change the issuing objects and varieties, and follow the same path of developing the national debt market in market economy countries all over the world, it is necessary to set up a special national debt issuing institution in the financial field as soon as possible as the basic organizational guarantee for standardizing the issuance of national debt. To test the future of the national debt market, the standardized issuance of national debt and the standardized establishment of national debt issuing institutions will certainly play an important and fundamental role in its perfection.