Only a dozen days into 2015, “liquidity” has shown extraordinary popularity.
On the morning of January 16, the central bank announced that it had recently issued the "Notice on Improving Credit Policies to Support Re-Lending Management Policies to Support the Expansion of Credit for Agriculture, Rural Areas and Small and Micro Enterprises" to improve support. The conditions for the issuance of re-loans to rural areas and small and medium-sized enterprises are clarified, and the quantity and interest rate quantification standards for financial institutions to use the central bank's credit policy to support re-loans for "agriculture, rural areas and farmers" and small and micro enterprises are clarified, and the credit policy-supported re-loan quota is increased by 50 billion yuan.
On January 14, news came to the market that the central bank was "calmly dealing with liquidity." According to sources, the central bank has recently renewed its mid-term lending facility (MLF) of approximately 280 billion yuan, mainly for joint-stock banks such as CITIC and Shanghai Pudong Development Bank on a one-to-one basis.
Market analysts believe that through the central bank’s operations in just a few days, it can be predicted that in order to ensure that the economy achieves stable growth throughout the year, the central bank, which has various policy tools at its disposal, will continue to use directional regulation and control ideas, both We will not "flood the market" or let the capital shortage exceed the range that the market can bear. Instead, we will make precise efforts to determine the "reasonable and sufficient" scale through the use of various combinations of tools and continuously strengthen liquidity management.
The 2014 financial statistics just released by the central bank also show that liquidity management has delivered satisfactory results in 2014.
Data show that at the end of 2014, the M2 balance was 122.84 trillion yuan, a year-on-year increase of 12.2%; RMB loans increased by 9.78 trillion yuan, an increase of 890 billion yuan year-on-year, reaching a record high. In addition, in December 2014, the monthly weighted average interest rate of inter-bank lending in the inter-bank market was 3.49%, 0.67 percentage points lower than the same period last year; the monthly weighted average interest rate of pledged bond repurchase was 3.49%, 0.79 percentage points lower than the same period last year. .
“Judging from the data, my country’s loan and social financing scale increased moderately in 2014, the inter-bank market liquidity was reasonable and moderate, the interest rate level generally showed a downward trend, and finance effectively supported the stable development and structure of the national economy. Adjustment," said Sheng Songcheng, director of the Central Bank's Survey and Statistics Department.
Faced with the increasingly complex economic situation, the recently concluded 2015 People's Bank of China Work Conference put forward new requirements for this year's liquidity management. The meeting made it clear that this year will "flexibly use various combinations of tools to maintain reasonable and sufficient liquidity in the banking system." Among them, "flexible use of various combinations of tools" is a new formulation, and this is the first time this exact statement has been made.
Directed efforts under total control
Although the expression "flexible use of various tool combinations" is novel, this concept runs through the entire monetary policy in 2014 operate.
This year, monetary policy implemented several combinations in operation:
A combination of price and quantity tools. During the year, the central bank implemented two targeted reserve requirement ratio cuts. While using quantitative tools, it also implemented an asymmetric interest rate cut at the end of the year and further expanded the upper floating range of deposit interest rates, realizing the creative use of price-based tools.
Flexible combination of long- and short-term policy tools. This year, the central bank created and used a series of liquidity management tools including the Pledged Supplementary Loan (PSL), the Short-term Liquidity Adjustment Facility (SLO), the Standing Lending Facility (SLF), and the Medium-term Lending Facility (MLF). The combination of these tools effectively maintains reasonably sufficient liquidity.
Targeted tools and comprehensive tools work together. At the beginning of 2014, the central bank proactively launched pilot operations of branch standing lending facilities in 10 regions including Beijing and Jiangsu. At the same time, it created multiple tools based on different characteristics of liquidity to release liquidity in a targeted and quantitative manner, such as PSL, MLF et al. The use of such tools in conjunction with price-based policy tools that favor comprehensive regulation such as interest rate cuts has resulted in numerous operational highlights throughout the year.
“Whether it is open market operations, short-term liquidity adjustment tools, standing lending facilities, etc., or traditional refinancing, interest rate cuts, reserve requirement ratio cuts, etc., the frequency of use of tools is significantly greater than in the past, and the regulation is precise. ', 'small steps', 'high frequency' and other characteristics well demonstrate its flexibility," said an analyst close to the central bank.
An authoritative person familiar with the central bank summarized the monetary policy operations for the whole year of 2014 as: "Using structure to drive the total volume, using points to drive the area, using micro-stimulation policies to promote the overall stable economic growth, and using direction to drive the comprehensive growth." . The person emphasized that the most significant operating feature in 2014 was "directionality". It is expected that the directional idea will continue and be further developed in 2015. The goal of structural adjustment will be combined with the aggregate policy. This is an important feature of this year's monetary policy. one. In terms of tool use, directional tool operations will still dominate.
"Generally speaking, monetary policy is an aggregate policy, focusing on managing and regulating monetary aggregates. However, in special periods, monetary policy also plays a role in promoting structural adjustment. This is not only theoretical It also has relatively successful international practice,” said the above-mentioned person.
For example, since the outbreak of the international financial crisis, unblocking the monetary policy transmission mechanism through targeted operations has become a new trend for the central banks of major economies.
The Federal Reserve implemented "Operation Twist" to break through the transmission obstruction of short-term interest rates to medium- and long-term interest rates, and the European Central Bank launched "Targeted Long-term Refinancing Operations" to guide funds to flow to the real economy through credit and other channels. Against this background, my country's central bank actively uses monetary policy tools to support economic structural adjustment in line with international trends.
Obviously, directional measures such as two targeted reserve requirement ratio cuts, the creation of mortgage supplementary loan tools, and improved management of consensual loans in 2014 well reflect this idea.
The task of macro-control is more difficult
One of the policy considerations that emphasizes the "flexible use of various tool combinations" is that the economic situation faced by monetary policy this year is more complex and changeable, and the task of macro-control More daunting.
The reporter learned from relevant people close to the management that recent central government meetings have shown a focus on "downward pressure on the economy," which shows that this year's economy is indeed more complex and full of uncertainties. The recently released economic and financial data also show this characteristic.
The person said: "The downward pressure on the economy has not diminished, which means that stabilizing growth is still the primary goal of this year's monetary policy. On the one hand, the central bank cannot 'release water' on a large scale; on the other hand, it must also implement measures to ensure economic growth." The task of growth means that we must use tools accurately and use various combinations of tools flexibly." Lian Ping, chief economist of the Bank of Communications, also said that our country's economy has entered a new normal, and the currency has entered a new normal. The policy operational framework is also in a period of adjustment and transition. At present, macroeconomic control still needs to strike a balance between stabilizing growth, preventing risks and deleveraging. In this complex situation, the regulatory effect of a single policy tool is relatively limited, and it is necessary to use a variety of policy tools for combined operation and flexible use.
Lian Ping further stated that in a complex situation where aggregate and structural problems coexist, and short-term macro-control and long-term structural adjustment are parallel, the effect of any single policy tool may be limited, and a "combination of policies" is needed. Boxing" for flexible control. In view of the certain advantages and effects of targeted RRR cuts in improving the pertinence of regulation and promoting economic structural adjustment, it is expected that targeted adjustment tools such as targeted RRR cuts and targeted re-lending may continue to be used in 2015, but the frequency will not be too high. The use of various tools and their flexible combination will be the "main theme" of monetary policy operations in 2015.
In the view of Wen Bin, chief researcher of China Minsheng Bank, "flexible use of a combination of tools" includes at least three connotations: first, appropriate tightness, taking discretionary decisions according to changes in the macroeconomic situation, and carrying out counter-cyclical regulation; The second is the combination of conventional monetary policy tools and new monetary policy tools, such as interest rates, deposit reserve ratios and SLF, MLF, and PSL. The third is the combination of total and targeted, such as comprehensive and targeted RRR cuts, re-lending and Targeted refinancing.
“The connotation of this policy will continue to be enriched as the macroeconomic control situation changes.” Wen Bin said.
Liquidity disturbance factors cannot be ignored
"Flexibly use a combination of various tools" to "maintain reasonable and sufficient liquidity in the banking system." In 2015, what factors will affect liquidity in my country's economic operation?
Ma Jun, chief economist of the Research Bureau of the Central Bank, said in an interview with this reporter: "There are many factors affecting liquidity in 2015. The first is the balance of payments. In the past, the balance of payments has experienced sharp declines. In the context of a surplus, the central bank's increase in foreign exchange holdings is the main channel for creating base money. Secondly, the various monetary policy tools used by the central bank will affect liquidity, some directly, and some directly. It affects broad money by affecting the money multiplier. Third, if banks are reluctant to lend, some regulatory policies and financial innovations will also affect the currency. Multiplier. ”
In further interviews, the interviewed experts summarized the main factors that will disturb liquidity in the next year from the perspective of domestic and foreign economic environments and the monetary policy orientations of major global central banks.
The first is the impact of changes in foreign exchange accounts, which are closely related to changes in the balance of payments. Against the background of the narrowing of my country's international balance of payments surplus and the withdrawal of the United States from QE, the growth rate of my country's foreign exchange outstanding has continued to decline in recent years. From January to November 2014, the cumulative increase in foreign exchange outstanding was less than 900 billion yuan, a decrease of 1.6 trillion yuan compared with the same period last year. In 2015, with the United States further withdrawing from QE or even raising interest rates, global capital returning to the United States, China's economy still facing downward pressure, Chinese enterprises accelerating their "going out" pace, and expectations for the RMB exchange rate diverging, foreign exchange outsourcing is expected to remain sluggish. The possibility of negative growth lasting several months cannot be ruled out, which will put tight pressure on domestic liquidity.
Secondly, the deposit creation capacity of loans has weakened. It is estimated that new RMB loans in 2015 will be between 10 trillion and 11 trillion yuan, which is not a low absolute level. However, in recent years, due to the impact of accelerated financial disintermediation and the rise of Internet finance on deposit diversion, the deposit creation ability of loans has weakened. Since 2014, the year-on-year growth rate of RMB deposit balances has continued to be lower than the growth rate of RMB loan balances. At the end of November, the balance of RMB loans increased by 13.4% year-on-year, while the growth rate of deposits was only 9.6%. This trend will continue in the future, and the deposit creation capacity of loans will weaken.
Thirdly, changes in fiscal deposits affect liquidity fluctuations.
Fiscal deposits are not included in general deposits, and an increase in fiscal deposits has a tightening effect on liquidity. In 2015, the proactive fiscal policy will be strengthened and the deficit rate will increase. However, seasonal changes in fiscal deposits will still affect market liquidity and cause fluctuations in liquidity.
“Generally speaking, there are many factors that have a negative impact on liquidity tightening in 2015. This requires monetary policy to remain neutral and loose, increase investment through open market operations, new policy tools such as SLF, and When necessary, we will lower the reserve ratio to provide a comprehensive response and maintain moderately abundant liquidity. "Lian Ping said that in view of the complexity of our country's economy, the current monetary policy needs to organically combine price, structure and total volume to seek better results. Effect.
2015 Monetary Policy Outlook
“Judging from the central bank’s recent calm and orderly monetary policy operations, despite the complex economic situation this year, the central bank has undoubtedly done a good job policy and tool reserves,” said a market analyst from ICBC.
Relevant people said that based on comprehensive information analysis from all aspects, the central bank launched a pilot operation of branch standing lending facilities in 10 regions including Beijing and Jiangsu in early 2014, and is expected to further expand this year. In addition, the central bank implemented targeted reserve requirement ratio cuts twice last year, and the subsequent effects need to be evaluated. Evaluating the effect will become an important reference for whether to continue targeted RRR cuts.
Based on the analysis of all parties, the monetary policy operation in 2015 is expected to focus on the following aspects: First, continue to enrich the tool box and improve the tool reserve. Continue to strengthen the research on internationally popular policy tools and localize them based on my country's actual conditions, constantly enrich and increase the tool basket, and combine and apply these tools. According to the objective and realistic needs of economic development, flexible combination and reasonable innovation should be implemented.
The second is to continuously innovate tool combinations. It is necessary to further study and summarize the characteristics of various types of tools, and continuously improve the long-term, medium-term and short-term varieties of the toolbox; accurately grasp the operation volume, direction and rhythm of the tools. Carefully explore and think about what tools to use to solve what problems. At the same time, we will actively improve a set of unconventional monetary operation mechanisms to cope with uncertain changes in macro conditions.
The third is to continue to adhere to the idea of ????directional regulation. In the process of changing modes and adjusting structures, the monetary authorities should take greater initiative, actively guide the flow of funds, continue to adhere to targeted regulation, guide financial institutions to revitalize existing stocks, make good use of increments, and increase credit to key areas and weak links. support. We will further improve the dynamic adjustment mechanism for differential reserves and intensify adjustments to macro-prudential policy parameters. Moderately increase the flexibility of loan progress and guide financial institutions to reasonably grasp the pace of loan disbursement based on actual demand and seasonal patterns.
Lian Ping believes that there are several relationships that need to be addressed. On the one hand, we must continue to increase the use of innovative tools such as SLF, MLF, and PSL, and give full play to the flexibility, pertinence, and guidance of these tools. On the other hand, it is also necessary to make timely and appropriate adjustments to traditional tools such as statutory reserve ratios and benchmark interest rates based on changes in the economic and financial situation. It is necessary not only to rationally use quantitative tools such as open market operations, statutory reserve ratio adjustments and differential reserve ratio dynamic adjustment mechanisms to ensure the smooth operation of the total amount of money and credit, but also to give full play to the power of price-based tools such as benchmark interest rates and the central parity rate of exchange rates. It plays a guiding role in promoting the decline of loan interest rates and social financing costs, and ensuring that the exchange rate is basically stable.