Sometimes, you will see figures about the bank balance in the newspaper. Sometimes it is reported that the balance may be negative, and then it is pointed out that this will have an impact on the bank interest rate. In fact, do you know what a bank balance is? What is the relationship between bank balance and interbank interest rate? Is the balance exactly negative? What does this mean?

Form a monetary base

China Mainland and Hongkong implement the currency board system, and our monetary base consists of three items: 1. Banknotes and coins in circulation; 2. Balance of the banking system; 3. Exchange Fund Bills and Notes.

Bank balance is a part of the monetary base, and the increase or decrease of the monetary base directly affects the money supply, so the amount of bank balance will also affect the money supply. So what is the bank balance?

"All registered banks in Hong Kong have opened accounts with the Monetary Authority to handle daily settlement. The balance of the banking system is the overall balance of the bank after the daily settlement of the HKMA account. The figure of bank balance shows the single-day surplus of the banking system. Tan Bingsheng, general manager of Dao Heng Bank, said that the bank's account in HKMA is not allowed to be overdrawn, so the balance should be positive, not negative.

Reflect the capital situation and interest rate trend

Mai Cuicai, an assistant professor in the Department of Finance and Decision-making at the Baptist University, pointed out that bank balances reflect the adequacy of short-term funds in the banking system. Therefore, under normal circumstances, when the bank balance is large, it means that the market has abundant short-term funds and the market has a large supply of funds, so the short-term interbank lending rate should be adjusted downward. On the contrary, if the bank balance drops to a level close to zero or negative, it means that the banking system is short of short-term funds, and banks will borrow funds from the interbank lending market in order to raise funds. With the increase in capital demand, interest rates have also been pushed up.

During the period of 1997, the bank balance was once negative, which led to the rise of overnight interbank interest rate? As high as 300%, it even affects the long-term interest rate to rise to double digits. Mai Cuicai emphasized that the amount of bank balance has little impact on the overall economy, but the bank balance is an indicator of the market demand for funds. Based on the relationship between supply and demand, the interest rate will be lowered if the balance is large, and the interest rate will be under upward pressure if the balance is small. The bank balance only reflects the amount of short-term funds, so it mainly affects the short-term interest rate.

Another Enlightenment of Bank Balance

The bank balance can not only reflect the overall daily amount of funds in the HKMA account, but also reflect the flow direction of a large amount of funds. Tan Bingsheng said, "By ensuring the inflow and outflow of funds derived from the exchange rate, a large amount of capital flows in the market can be reflected. However, this can only be seen if there is a lot of money activity. 」

For example, when banks or individuals use the guaranteed exchange rate to buy US dollars from HKMA and convert the US dollars into Hong Kong dollars, assuming that it is HK$ 2 billion, the bank balance will be reduced from HK$ 65.438+0 billion to HK$ 8 billion (assuming that the original bank balance is HK$ 6.543+0 billion), which shows that there is a large outflow of market funds. On the contrary, when HKMA absorbs dollars from the market, or banks sell dollars to HKMA in large quantities. Similarly, if the amount is converted into HK$ 2 billion, the bank balance will increase from HK$ 654.38+0 billion to HK$ 654.38+0.2 billion, which shows that a large amount of funds have flowed into the market. , reference: produced by Wiki,