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, a government bond issued by the central government to raise financial funds, and a debt certificate issued by the central government to investors, which promises to repay the principal and interest 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 central government often issues treasury bonds to make up the national fiscal deficit, or to raise funds for some expensive construction projects, some special economic policies and even wars. Because the national debt takes the tax revenue of the central government as the guarantee of repayment of principal and interest, 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 Ministry of Finance on behalf of the central government. Guaranteed by the national financial reputation, the credibility is extremely high. It has always been called "Phnom Penh bond", and cautious investors like to invest in government bonds. There are three kinds of bonds: voucher bonds, physical bonds and book-entry bonds.
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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 perspective of the subject of legal relationship, the creditors of national debt can be citizens, legal persons or other organizations at home and abroad, or the government and international financial organizations of 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. 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 it is its political significance that is widely publicized, not its economic role and benefits. 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 its 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 overdraw treasury bonds directly. 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 financing 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 market economic activities. Under the traditional system, China implements unified centralized control, that is, all economic activities are controlled by the state, which is the object of reform. At present, the market economy system is established and improved, and the economic construction that the state is responsible for is limited to non-competitive projects such as infrastructure, and generally does not involve the content of competitive fields. 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 on people to economize was also a kind of political mobilization, which was a concrete embodiment of the centralized economic system. People always emphasize that savings are 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 the central government and guaranteed by the national reputation, so it has the reputation of Phnom Penh bond. Relatively speaking, this is a credit tool with high security, huge financing scale and convenient realization. In other words, compared with the currency issued by the state, the national debt is a credit certificate second only to the 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.
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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, financial institutions take over all the national debt, and then turn to social sales, and the unsold part is borne by financial institutions themselves.
Sales method. That is, the government entrusts marketing agencies to use the financial market to directly sell government bonds.
Payment and distribution law. That is, the government should pay cash instead of government bonds.
Compulsory apportionment method. In other words, the state uses political power to force its citizens to buy government bonds.
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sink a national debt
1, the way to repay the national debt
Repayment by installments. 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 by drawing lots regularly according to the national debt number until the repayment period ends, and all national debt is paid off 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.
Market purchase and sale compensation law. That is, to buy back the national debt from the securities market, even if it expires, this national debt has been fully held by the government.
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 government will include the annual repayment of national debt as a fiscal expenditure item in the expenditure budget of the year, and normal fiscal revenue will ensure the repayment of national debt.
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. The government budget sets up a special fund to repay the national debt, and allocates 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. The government issues new bonds as a source of funds to repay old debts. The essence is the extension of the debt period.
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Transformation of China's National Debt Issuance
During the period of non-market issuance of national debt, every year the state issues national debt, which requires different levels of political mobilization and even administrative apportionment. After the issuance of government bonds is completely market-oriented, people see that the issuance of government bonds causes a big move of bank savings every year, and quite a few people buy government bonds with bank certificates of deposit. 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. For a long time, because China's national debt is mainly issued to residents, the special function of national debt investment has almost been abandoned. 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 institutions selling government bonds, but the main force buying government bonds. In this regard, stopping commercial banks from selling government bonds to residents should be an obvious sign that China's government bond market is moving towards standardization.
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 the central bank, the treasury bonds issued by commercial banks' reserves should be short-term treasury bonds within 1 year, that is, treasury bonds with maturities of 4 weeks, 8 weeks, 3 months and 6 months. If the distribution object changes, from individual residents to 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 should be standardized in place. 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 it should be one of the important contents of market supervision to abide by international practice and turn to issuing short-term bonds.
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 that issue treasury bonds for a long time, most of them are issued to individual residents, avoiding issuing treasury bonds with the same bank deposit period. This kind of national debt can be exempted from interest tax, which is mainly purchased by individual residents for their children's education expenses or personal assets reserves, which is very beneficial to stabilizing residents' lives. In order to change the variety of national debt issued in China, we should not only issue short-term national debt for financial institutions, but also develop new long-term national debt for individual residents.
3, from the entrusted bank to the individual residents and then to the financial sector to set up their own national debt issuers.
For a long time, China's national debt is mainly issued to individual residents 1 year to 5-year bonds, so the financial department has to entrust the banking system to issue the bonds 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 to buy government bonds because the interest rate of government bonds is higher than that of bank savings, and debt interest's income is not taxed; Banks sell treasury bonds because there is a fixed issuance fee to be recorded; Both buyers and sellers are profitable, but as far as society is concerned, they have paid unnecessary financing costs, because the money used to buy government bonds has been well kept in banks and can be used centrally by society. There is really no need to turn it around in vain and 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 government 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 long-term bonds issued by this institution 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 take the same road of developing the national debt market in all market economy countries in 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. Looking at the future of China's national debt market, the standardized issuance of national debt and the standardized establishment of national debt issuing institutions will surely play an important and fundamental role in its perfection.