In 2021, the monetary policy must be "stable" and maintain the sustainability of the normal monetary policy space. From a macro perspective, we need to stabilize the macro leverage ratio. While supporting the development of the real economy, attention should be paid to preventing the accumulation of financial risks.

Policy scan in 2021:

1. A prudent monetary policy must be flexible, precise, reasonable and appropriate. We will improve the money supply control mechanism and keep the growth rate of broad money and social financing basically in line with the nominal economic growth rate.

2. Continue to give full play to the precise role of structural monetary policy tools and credit policies, and build a financial system and mechanism to effectively support the real economy such as small and micro enterprises.

3. Implement major decisions and arrangements for carbon peak and carbon neutrality, and improve the green finance policy framework and incentive mechanism.

4. Accelerate the improvement of the macro-prudential policy framework and incorporate major financial activities, financial institutions, financial markets and financial infrastructure into macro-prudential management. Strengthen the monitoring and assessment of systemic financial risks and promote the establishment of a macro-prudential stress testing system step by step.

5. Continue to prevent and resolve financial risks. Strengthen risk investigation and prepare risk responses. Improve the long-term mechanism for risk prevention and disposal, and consolidate the main responsibilities of financial institutions and shareholders, the territorial responsibilities of local governments, the supervisory responsibilities of financial regulatory authorities, and the responsibilities of the lender of last resort. Improve the construction and institutional setup of the deposit insurance system. Strengthen prudent supervision of the financial activities of Internet platform companies.

6. Deeply participate in global financial governance, strictly prevent and control external financial risks, and steadily expand two-way financial opening up.

7. Promote the internationalization of the RMB steadily and prudently.

8. Deepen the reform of financial markets and financial institutions. Take the lead in formulating the bond market development plan, promote the improvement of the bond market legal system, and promote infrastructure interconnection. Improve the multi-channel bond default resolution mechanism.

9. Continuously improve foreign exchange management and services. Promote the opening up of capital projects in a steady and orderly manner. Support enterprises to use foreign exchange derivatives in a reasonable and prudent manner to manage exchange rate risks. Accelerate the improvement of the two-in-one management framework of "macro-prudential + micro-supervision" in the foreign exchange market.

10. Improve financial services and management levels. Coordinate and promote the construction of the financial legal system. Improve the application and management level of financial technology. Steadily carry out pilot tests of digital renminbi.

Policy Comments:

As in previous years, monetary policy is at the top of the central bank's annual tasks, and the tone is "flexible, precise, reasonable and appropriate"; the voice-over is - with appropriateness Monetary growth supports sustained economic recovery and high-quality development. The second is the focus of the work, that is, "building a financial system and mechanism to effectively support the real economy such as small and micro enterprises." From this, we can see that supporting the development of the real economy, especially small and micro enterprises, is still the focus and pain point in 2021. “Properly designing and planning green financial policies” is also regarded as a key next step for the central bank.

From the perspective of continuing to prevent and resolve financial risks, this task is placed after "accelerating the improvement of the macro-prudential policy framework" and appears in different goals and tasks, which means that the financial risk prevention mechanism is becoming increasingly perfect.

The stock, bond, and commercial markets have fallen simultaneously recently. The reason for this short-term change may be the tightening of monetary policy, or the sudden emergence of a liquidity turning point; perhaps it can be inferred that this period is due to policy adjustments. Window period - normalcy needs to return after the crisis eases; it may just exceed market expectations. Only by being flexible and not making sharp turns can we understand the looseness and tightness of monetary policy.

2021 is the first year of the "14th Five-Year Plan", but the world situation is still complex and severe, and the epidemic is still spreading. While "maintaining the sustainability of normal monetary policy space", the central bank must both While supporting the development of the real economy and stimulating the vitality of market entities, we must also pay attention to preventing the accumulation of financial risks; the task is arduous and requires a well-targeted balance between various aspects.