Zhang Monan: Unconventional Monetary Tools Will Be Routinely Changed

The central bank adopts SLF operation instead of comprehensive monetary instruments such as lowering interest rates or reducing interest rates. It shows that the central bank is still avoiding the "strong stimulus" or the comprehensive easing policy. Instead, it adopts the monetary control mode of "total stability and stock optimization". In terms of money stock, China's credit scale currently ranks first in the world. China's generalized currency (M2) is about 1.5 times that of the United States. It is the largest currency issuing country in the world. The ratio of M2 to GDP is 2, far exceeding 1 of Japan and 0.7 of the United States. But the problem is that the proportion of medium and long term loans of commercial banks is higher than 55%, and the idle funds of banks are not abundant. Commercial banks or financial institutions generally exist "short deposit and long loan" phenomenon. The mismatch of asset liability term directly causes the liquidity risk of commercial banks. Therefore, short term monetary instruments are needed to adjust liquidity.

Compared with the total amount of tools such as direct reduction or reduction of interest rates, the SLF time period is 3 months, and natural money is embedded in the mechanism of currency return. After 3 months, whether or not to continue to invest in the monetary authorities has greatly enhanced the initiative, flexibility and foresight of monetary policy. If the current structural monetary policy is a response under the new normal, the definition and transformation of the marketization framework of monetary policy is not yet mature. Then the dominant trend that can be determined is that the way in which foreign currency was invested in the basic currency in the past is changing.

More and more signals show that with the United States QE policy Adjusting the inflection point of the global monetary and financial cycle triggered by the adjustment, the internal and external environment of RMB assets and currency expansion is changing. The risk free arbitrage space calculated by us and China's spot forward exchange rate has significantly narrowed, and the future foreign exchange occupation may continue to decline. This will greatly change the currency creation mechanism which has always been dominated by foreign exchange, which means that the economic cycle of China's main foreign exchange base money has ended, and China needs to innovate policy tools to regulate the decline of water level.

The second purpose is to stabilize the central bank by releasing short-term liquidity. short-term market The financing interest rate, in turn, activates the power of financial institutions to allocate long term assets such as credit and intends to reduce the cost of entity financing. However, it is still necessary to further observe whether the cost of entity financing can be effectively reduced. Because of the reduction of financing costs, we must take a comprehensive look at the demand side and supply side of funds. Considering the weak demand for physical financing, the money supply is endogenous contraction, and the economic downward pressure is bigger. Although the short-term capital market may stabilize the market interest rate, long-term interest rate depends on the level of credit risk premium, especially by the balance sheet of commercial banks.

Over the past year or so, Central Bank New financing tools have been introduced, and the stock of capital has been leveraged, and interest rate anchors have been formed for short-term and medium-term interest rates. The introduction of PSL (supplementary loan) by the central bank is an important channel for the basic money supply, while making up for the high credit risk of reloans. On the other hand, PSL interest rate can be used as a benchmark of policy interest rate, and the market interest rate can be guided by adjusting the PSL interest rate, making the monetary policy transformation from quantity anchor to interest rate anchor. Because PSL's collateral is mainly loans, it will encourage banks to put in the form of loans. The result is to supplement the basic money and encourage the expansion of bank assets, creating the role of marginal money creation. In addition, the central bank can adjust the structure of the bond market by adjusting the excess reserves and overrun rates of commercial banks and financial institutions, or imitated the unconventional practices of developed countries, such as restarting the debt market to stabilize stock liquidity and making the basic money supply channels more diversified and diversified. Therefore, it can be expected that the central bank will use more structured monetary instruments more frequently, and the monetary initiative will be greatly enhanced.