The expansion of the central bank's balance sheet refers to the expansion of the central bank's balance sheet, that is, the central bank increases the assets purchased from the market and increases the market liquidity accordingly. Central bank contraction refers to the reduction of the balance sheet of the central bank. In other words, the central bank will reduce the financial assets such as bank bills purchased from the market, and will also reduce the liquidity of the market accordingly.
Whether the central bank expands or contracts its balance sheet, it is to adjust the excess deposit reserve ratio and maintain the market interest rate of money at a reasonable level by adjusting its balance sheet.
For example, if a shopkeeper opens a bank, the cost is 10000. One day, a guest officer deposited 1200 pieces of silver, and the shopkeeper issued a silver ticket with the same value. At this time, the assets of the bank are1.1.20,000 rupiah; The silver ticket in the holder's hand is the bank's debt. The next day, when the ticket holder goes to the bank to cash silver, the silver in the bank decreases and the silver ticket is destroyed, that is, the assets and liabilities decrease at the same time. This is called shrinking the table.
Sheng Songcheng, counselor of the Bank of China and former director of the investigation and statistics department of the central bank, recently said that the central bank's contraction does not mean tightening, and the expansion does not mean monetary relaxation; If the Bank of China does not take the initiative to shrink its balance sheet, there will be no large number of shrinking balance sheets, and China will still maintain a stable and neutral monetary policy.
The balance sheet of China's banks is quite different from that of the United States. The United States took the initiative to shrink its balance sheet, while the Bank of China did not take the initiative to shrink its balance sheet, so there is no problem of shrinking its balance sheet in large quantities.
1. Basic logic of American abbreviation list
The general logic of the Fed's operation is the same as that of the Bank of China, that is, it uses various means to adjust the base currency, thus adjusting the money market interest rate. But there is one difference. Our central bank absorbs foreign exchange assets into reserve assets, which is rare in the US central bank.
The Fed's current shrinking table stems from previous rounds of active "shrinking table", which is what we often call quantitative easing (QE) policy. Quantitative easing means that when the central bank wants to implement expansionary monetary policy when the interest rate is below zero, it will increase the base money supply by buying medium and long-term bonds such as national debt, which is similar to open market operation. The purchased bonds form the assets of the central bank, and at the same time form the base currency on the right side of the central bank's balance sheet, thus "expanding the table".
2. There is no pressure to downsize China.
The reason why the United States wants to "shrink the table" is because it has accumulated huge assets after implementing the QE policy. However, China has not implemented corresponding policies, and the assets available for table reduction are also very limited.
The creditor's rights of the Federal Reserve account for more than 90% of its total assets for a long time, with national debt (55.3%) and MBS(39. 1%) as the main targets. The creditor's rights of China Bank only account for 30% of the total assets, of which the national debt only accounts for 4.4% of the total assets.
It can be seen that the balance sheet structures of the Federal Reserve and the Bank of China are significantly different. The Bank of China does not have the huge national debt and MBS that the Fed needs to deal with, nor does it have the urgent pressure to "shrink its balance sheet" like the Fed.