SHANGHAI, Oct 23 Reuters A Chinese policy think tank has called for Beijing to issue 2 trillion yuan 280 billion of special treasury bonds to set up a stock market stabilisation fund, the 21st Century Business Herald reported on Wednesday.

Such a fund could steady the market through buying and selling bluechips and exchangetraded funds ETFs, according to the proposal by the Institute of Finance Banking, affiliated to the Chinese Academy of Social Sciences CASS.

The proposal is part of a quarterly report by the institute on China39;s economy. CASS is China39;s premier academic organisation, although it was unclear if or how the proposal would influence policy.

When asked about the potential setup of a stock market stabilisation fund last month, China39;s central bank chief Pan Gongsheng told reporters a study of the proposal was under way.

China39;s recent policy stimulus has triggered a furious rally in stocks, though that euphoria has turned into caution in past weeks. Bluechip stocks have gained roughly 24 over the past month.

The Institute of Finance Banking also proposed more investment by longterm capital to steady the market, according to the newspaper. For example, China could raise the ceiling of stock investment by insurance companies and the national pension fund, the think tank proposed.

China has already introduced policies to encourage institutional stock investment.

Last Friday, China39;s central bank kicked off two funding schemes that will…