Re-loan refers to the loan issued by the central bank to financial institutions to achieve the monetary policy objectives. China's refinancing has two meanings. Refinancing in a narrow sense refers to the general term for central bank loans to financial institutions. Broadly speaking, refinancing refers to the concept of refinancing, including bill rediscount. However, as one of the traditional three magic weapons of monetary policy tools, rediscount should be excluded from the scope of refinancing.

Re-loan refers to the loan issued by the central bank to commercial banks. According to Article 8 of the Interim Measures for the Administration of Loans to Financial Institutions of the People's Bank of China, loans to financial institutions by the People's Bank of China are divided into credit loans and rediscount. Credit loan refers to the loan granted by the People's Bank of China with its credit as guarantee according to the financial situation of financial institutions. According to the provisions of Articles 22 and 27 of the Law of the People's Bank of China, credit loans refer to loans provided by the central bank to commercial banks, excluding other financial institutions other than commercial banks. Therefore, in China, refinancing refers to the credit loans provided by the central bank to commercial banks.

Re-lending is a planned quantitative monetary policy tool, which is administrative and passive. However, it should be pointed out that it is impossible for any single and independent monetary policy tool to complete all macro-control by learning from the financial development experience of developed countries, but it is necessary to choose appropriate tools to cooperate and coordinate according to the monetary policy objectives in different periods. From the macro-control practice of the People's Bank of China, combined with the use environment of China's monetary policy tools, it can be affirmed that refinancing is an effective indirect control means in the process of China's system transition, which plays an irreplaceable role in regulating the total amount of base money, adjusting and optimizing the credit structure, supporting the financial system reform, and maintaining the national reputation.

Function, adjust the money supply and market interest rates.

First, by adjusting the refinancing rate, the central bank affects the cost and availability of credit funds obtained by commercial banks from the central bank, thus changing the money supply and market interest rate. For example, when the central bank wants to tighten monetary policy, it can raise the interest rate of refinancing, reduce the amount of base money, increase the loan cost of commercial banks to the central bank, and inhibit commercial banks from lending to the central bank;

Adjust interest rate

Second, the adjustment of the refinancing rate is an effective way for the central bank to publicize the changes in monetary policy to commercial banks and the society, which can play a warning role and thus affect people's expectations to a certain extent. When the central bank raised the refinancing rate, it showed that the central bank issued a warning on the progress of inflation, which made manufacturers cautiously engage in further investment expansion. The central bank's reduction of the refinancing rate means that inflation has eased, which will stimulate investment and economic growth to a certain extent and adjust the industrial structure and product structure.