China News Client Beijing, March 13 (Reporter Li Jinlei) On March 13, the central bank announced a targeted reduction on March 16 and released long-term funds of 550 billion yuan.
Release of long-term funds for the second time in the year 550 billion yuan
The central bank stated that on March 16, 2020, the targeted reduction of inclusive finance will be implemented, and the targeted reduction of banks that meet the assessment criteria will be 0.5 to 1 percentage point.
In addition, the qualified joint-stock commercial banks will be further reduced by 1 percentage point to support the issuance of loans to the inclusive financial sector. The above-mentioned targeted RRR cuts totaled 550 billion yuan of long-term funds.
Information map of the People's Bank of China. Photo by Li Huisi issued by China News Agency
This is the second time this year. The first RRR cut was on January 1, when the central bank decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on January 6, 2020.
Prior to this reduction, the country has released a clear signal of the reduction.
The executive meeting of the State Council held on March 10 requested that the inductive measures for inclusive finance should be stepped up and additional reductions in joint-stock banks should be stepped up to encourage commercial banks to increase loan support for small and micro enterprises and individual industrial and commercial households. Resumption of work and production will help reduce financing costs.
It ’s a bit different this time.
Compared with the first reduction, this reduction is a targeted reduction by Inclusive Finance, and joint-stock banks have obtained additional targeted reductions.
What is the targeted reduction of inclusive finance?
Since 2018, the central bank has established an annual evaluation system for targeted financial reduction of inclusive finance, giving large and medium-sized commercial banks with a certain percentage of loans in inclusive finance a preferential reserve ratio of 0.5 percentage points or 1.5 percentage points.
Inclusive finance loans include farmer production and operation loans, filed loans for the poor, consumer loans, student loans, business guarantee loans, individual business loans, business loans for small and micro-enterprise owners, and single-family credits less than 10 million Small business loans, micro-enterprise loans with a single household credit of less than 10 million.
In other words, if the inclusive financial services assessment has reached the standard, commercial banks will be able to enjoy preferential discounts.
Dong Ximiao, a special researcher at the National Finance and Development Lab, said that such targeted reductions are in itself to encourage banks to increase inclusive financial services, and lowering standards can also allow banks to increase their services to small, medium and micro enterprises, and provide them with more More low-cost funds.
Data Map: Bank staff counting currency. China News Agency reporter Zhang Yunshe
Why do joint-stock banks require additional targeted reductions?
Joint-stock banks include China Merchants Bank, SPDB, CITIC Bank, China Everbright Bank, Huaxia Bank, Minsheng Bank, and Guangfa Bank.
The central bank said that this time, the joint-stock commercial banks that received a 0.5 percentage point reserve ratio discount will be targeted by an additional 1 percentage point. At the same time, they will be required to use the reduced funds to issue loans to the inclusive financial sector. Large and small credit support for inclusive financial sectors such as micro-enterprises and private enterprises.
Wen Bin, chief researcher of China Minsheng Bank, said that the differentiated service characteristics of joint-stock banks are relatively clear. Many banks have long cultivated private and small and micro customers for a long time, and play an irreplaceable role in serving specialty industries, regional enterprises, small and micro enterprises, and individual industrial and commercial households. It can be said that apart from large banks, joint-stock banks are the main force for inclusive financial services. The additional reduction in quotas will help increase loan support for small and micro enterprises and individual industrial and commercial households.
What impact?
——Promote the reduction of financing costs and benefit the real economy
The central bank said that the targeted reduction of long-term funds has effectively increased the bank's stable source of funds to support the real economy. It can also directly reduce the cost of interest payments of relevant banks by about 8.5 billion yuan each year. It will help promote the reduction of loans for small, micro, and private enterprises through bank transmission. Real interest rates directly support the real economy.
Wen Bin believes that the targeted reduction of inclusive finance will help achieve precise rescue. With the implementation of the inclusive financial targeted reduction policy, funds will be released to specifically serve weak areas such as small and micro enterprises, individual industrial and commercial households, help enterprises resume work and resume production, and improve the accuracy of financial rescue. At the same time, the easing of funds also helps to reduce the cost of capital for banks. It is expected that the LPR will decrease further on March 20, which will drive down the financing cost of enterprises.
How to affect the stock market and the property market?
——Enhancing liquidity is good for capital markets
Historically, lowering standards has tended to be positive for the stock market. As market liquidity increases, it will help boost stock market confidence.
On March 12, U.S. stocks plunged, and a second meltdown occurred within a week. Stock markets in more than 10 countries worldwide also melted because of the plunge.
In this context, affected by factors such as the expectation of a RRR cut, on March 13, China's A shares bottomed out and rebounded. As of the close, the Shanghai Composite Index fell 1.23% to 2878.43 points; the Shenzhen Component Index fell 1.00% to 10831.13 points; the ChiNext Index fell 0.75% to 2030.58 points and recovered 2000 points.
Global stock market performance. From wind
——Stabilize confidence in the real estate market
On March 3, the central bank and other departments held a symposium on financial support for epidemic prevention and control and economic and social development, clearly insisting on the positioning of houses for housing, not speculation, and the requirement of "not using real estate as a short-term economic stimulus" requirement Maintain the continuity, consistency and stability of real estate financial policies.
Zhang Dawei, chief analyst of Zhongyuan Real Estate, told a reporter from China News Network that the RRR cut is not for real estate, but to reduce corporate financing costs. Under the explicit requirements of "no housing and speculation" and "no use of real estate as a means to stimulate the economy in the short term", the funds released by the RRR cut were strictly controlled into the real estate sector.
"However, the RRR cut is conducive to the slowdown of the real estate market, and it will help stabilize market confidence." Zhang Dawei said that the economic vitality will rise to a certain extent after the RRR cut. For second-tier cities, funding will improve, coupled with the huge population of just-in-demand, it is expected to stop falling. However, for areas with stable populations or relocated areas, it is difficult for the real estate market to come out of the doldrums.
Will it be lowered in the future?
Does the RRR cut mean the start of "flooding floods" and changes in the direction of sound monetary policy?
the answer is negative.
The central bank emphasized that the implementation of a sound monetary policy, more flexibility and appropriateness, put support for the recovery of the real economy in a more prominent position, not flood flooding, take into account internal and external balance, maintain reasonable and sufficient liquidity, and increase the scale of monetary credit and social financing. Adapt to economic development, and create a suitable monetary and financial environment for high-quality development and supply-side structural reform.