Research on the Relation Between Government Treasury Cash Management and Monetary Policy

Abstract

After more than ten years of endeavors and efforts, the reform of the financial treasury management system has made significant progress, and functions such as budget execution management and monitoring, financial financing and financial management, financial operation information analysis and reflection, macroeconomic regulation and control, and policy implementation have been basically established. With the steady implementation of the central treasury cash management, local treasury cash management has gradually been pushed forward. International experience shows that a sound treasury cash management system must not only achieve centralized control over treasury funds, but also be able to work closely with monetary policy to effectively invest and finance treasury cash. In this paper, the empirical analysis is carried out by using the econometric model. The results show that the positive impact of the treasury cash management operation has a negative impact on the money supply M1and M2, and the reaction trajectory presents a positive U-shape, which is analyzed from the specific response. The treasury cash management operation has less impact on M1, while the impact on M2 has a volatility characteristic.