Simply put, funds flow in the financial system, not to the real economy. In fact, "there is no idling of funds, but the financing link has been lengthened." At present, the mainstream view is that "finance serves the real economy", so as long as funds do not flow directly from financial institutions to the real economy, then the link before the last flow to the real economy is regarded as "idle funds".
Other manifestations of "idle funds" include that some enterprises have obtained credit funds and idle funds raised by listing, but they have not been put into production but used to buy wealth management products; Some enterprises use borrowed new money to pay off old debts, and so on. Idle funds will increase the risk of financial institutions. After all, all financial institutions in the banking system use mutual credit guarantee. As long as there is a serious problem at one end, it is easy to involve multiple financial institutions and generate systemic risks.
As an indirect financing institution, the bank's duty is to collect small idle private funds and then lend them to enterprises in a centralized way, so that the money in the society can flow and improve the efficiency of fund financing. The profit model of banks is to earn the difference between deposits and loans, which also covers operating costs and bad debt risks. What is bad debt? I just can't get the loan back. Why is this happening? To put it bluntly, the profit of loan enterprises is really not high, and they can't afford to pay back the money.
Banks are highly leveraged industries, so we should guard against liquidity risk and control bad debt risk. So sometimes, banks are afraid to lend to enterprises because it is likely to produce bad debts. However, funds have a cost. In addition to the inevitable risk reserve, the remaining money should be used for lending as much as possible, otherwise it will become a "dormant account" that enterprises lying there do not want to borrow. What can we do?
Only when it flows within the banking system, everyone borrows money from each other, raises interest rates from each other, and eats spreads from each other. However, the water released by the central bank failed to flow into the real economy and could only be idle in the banking system. This is what we call idling of funds.
For example, the interest rate of a current deposit in a bank is 0.35%, but if you take it out and deposit it in Yu 'ebao, Yu 'ebao will make your money into an agreement deposit and deposit it in the bank, and your yield will be 4 to 5 percentage points. For banks, the funds are still those funds, but the cost has increased ten times.
For another example, the one-year bank loan interest rate is 6%, but many local government financing platforms and real estate enterprises that need funds have to lend through bank-trust cooperation and bank-securities cooperation. During this period, from one bank to another, to the trust, to the entity, every link in the middle will charge half a point to one point, "pushing up the cost of capital".