The central bank issued a heavy report! Resolutely not to engage in flood irrigation

category:Finance
 The central bank issued a heavy report! Resolutely not to engage in flood irrigation


Mingming, deputy director of CITIC Securities Research Institute, said that the domestic economy has entered a new stage of development with various advantages, but the international environment is becoming more and more complex. Against the background of periodic increase in macro leverage rate this year, we should pay attention to how to stabilize the leverage in the future. At the same time, due to the time lag between financial risks and economic shocks, we should pay attention to the adverse upward pressure of banks in the future.

In response to the uncertainty of the domestic and global economy, as well as the macro leverage ratio and the adverse pressure of banks, Mingming said that the central banks report proposed to scientifically grasp the dynamics and rhythm of policies and maintain sufficient liquidity. For example, we should not let the market be short of money, but we should not let the market overflow.

Mingming said that the report stressed that further reform should be carried out to improve the formation mechanism and transmission mechanism of interest rate marketization to promote the reduction of social financing costs; the decisive role of the market in the formation of RMB exchange rate should be brought into play; the precise drip irrigation and direct access of policies should be enhanced; at the same time, the normal monetary policy space should be maintained as long as possible, and the macro leverage ratio should be basically stable Yes.

Do not let the market be short of money, and resolutely do not engage in flood irrigation

While maintaining a stable tone of monetary policy, the report clearly points out that it is necessary to improve the monetary supply control mechanism. According to the macro situation and market needs, we should scientifically grasp the strength, rhythm and key points of monetary policy operation. We should not only maintain reasonable and sufficient liquidity and prevent the market from being short of money, but also resolutely refrain from flooding and allowing the market money to overflow.

According to the report, we should attach importance to the management of expectations and keep the price level stable. We should properly handle the internal and external balance and the long-term and long-term relations, implement the normal monetary policy as long as possible, and keep the macro leverage ratio basically stable.

According to the report, the overall downward trend of price increase continued. In the medium and long term, Chinas economy is generally stable, the total supply and demand is basically balanced, the supply side structural reform is in-depth promoted, the role of market mechanism is better played, the monetary policy remains stable, the monetary conditions are reasonable and moderate, and there is no basis for long-term inflation or deflation.

LPR reform promotes reduction of loan interest rate

For the loan interest rate related to the financing cost of the real economy, the report also has a clear position. We should deepen the reform of loan interest rate and promote the reduction of loan interest rate.

According to the report, the conversion of pricing benchmark for floating rate loans was successfully completed.

As of the end of August, the benchmark conversion of existing loans had reached 92.4%. Among them, the conversion progress of existing corporate loans is 90%, the conversion progress of existing personal housing loans is 99%, and 91% of the converted stock loans are converted to reference LPR pricing.

With the completion of the conversion of pricing benchmark of existing loans, the change of LPR can affect most loans, the implicit lower limit of loan interest rate is completely broken, the transmission efficiency of monetary policy is further improved, and the effect of reducing financing cost is more obvious.

LPR reform also plays an important role in promoting the reform of deposit interest rate marketization. In September 2020, the weighted average interest rates for three-year and five-year deposits were 3.67% and 3.8% respectively, which were 5 and 26 basis points lower than those in December last year.

Firmly hold the bottom line of no systemic financial risk

With the gradual promotion of the normalization of monetary policy, the market has paid more attention to the liquidity environment.

According to the report, the key to observing the tightening of monetary policy is the money supply and the scale of social financing as the intermediary target of monetary policy. As long as the reasonable growth of money and credit is maintained, the market-oriented function of bank money creation is normal and the basic currency provided by the central bank is moderate.

In general, there is no logical relationship between the size of the central banks balance sheet, money multiplier and M2 growth in broad sense, the report said. China, as one of the few large economies in the world that still insists on the normalization of monetary policy, does not need to invest liquidity in the way of large-scale expansion of the central banks balance sheet, and should not be simply measured by the expansion range of the central banks balance sheet and the monetary multiplier The effect of quantitative monetary policy. While the external environment is constantly changing, the report shows the position of maintaining the autonomy of monetary policy. It is pointed out that there should be a floating currency market management system based on floating supply and demand. We will continue to let the market supply and demand determine the exchange rate level, and will not intervene in the foreign exchange market in a normal way. To enhance the flexibility of RMB exchange rate, help to hedge against the impact of external instability and uncertainty, and maintain the autonomy of monetary policy. At the same time, the report stressed that we should fight the battle to prevent and resolve major financial risks, improve the system of financial risk prevention, early warning, disposal and accountability, maintain financial security, and firmly hold the bottom line of no systemic financial risks. Source: Chen Hequn, editor in charge of China Securities Network_ NB12679

In general, there is no logical relationship between the size of the central banks balance sheet, money multiplier and M2 growth in broad sense, the report said. China, as one of the few large economies in the world that still insists on the normalization of monetary policy, does not need to invest liquidity in the way of large-scale expansion of the central banks balance sheet, and should not be simply measured by the expansion range of the central banks balance sheet and the monetary multiplier The effect of quantitative monetary policy.

The report points out that we should adhere to a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies. We will continue to let the market supply and demand determine the exchange rate level, and will not intervene in the foreign exchange market in a normal way. To enhance the flexibility of RMB exchange rate, help to hedge against the impact of external instability and uncertainty, and maintain the autonomy of monetary policy.

At the same time, the report stressed that we should fight the battle to prevent and resolve major financial risks, improve the system of financial risk prevention, early warning, disposal and accountability, maintain financial security, and firmly hold the bottom line of no systemic financial risks.