In order to achieve an appropriate growth of money supply, the PBC issued central bank bills and strengthened open market operation to absorb excessive liquidity. In 2005, the total issuance volume reached 2.8 trillion yuan of central bank bills, 2.1 trillion yuan being outstanding volume at year end.
In the first two months of 2006, a total of 825 billion yuan worth of central bank bills was issued with 2.4 trillion as outstanding at end February. Given the limited financing channels and CAR’s restraint on business expansion of commercial banks, central bank bills became a good investment choice.