A prudent monetary policy should be flexible and appropriate (Sharp Finance)

　　On February 11, the People's Bank of China released the "Report on the Implementation of China's Monetary Policy in the Fourth Quarter of 2021" (hereinafter referred to as the "Report"). Economic support is solid.

In the next stage, a prudent monetary policy should be flexible and appropriate, increase the intensity of cross-cycle adjustment, give full play to the dual functions of monetary policy tools in terms of total amount and structure, and focus on fully exerting force, exerting force with precision, and exerting force in front of the flood irrigation”, and meet the reasonable and effective financing needs of the real economy.

　　Business loan interest rates slashed

　　Since 2021, the prudent monetary policy has been flexible, precise, reasonable and appropriate, the scale of monetary credit and social financing has increased reasonably, the credit structure has been continuously optimized, and the cost of comprehensive social financing has been stable with some decline, and the promotion of high-quality economic development has achieved remarkable results.

　　The stability of total credit growth has been significantly enhanced.

In the second half of 2021, the People's Bank of China will forward-lookingly guide financial institutions to enhance the stability of the growth of total credit, focus on coordinating the cross-year connection of credit, and stabilize the financial support for the real economy. RMB loans have achieved a year-on-year increase.

At the end of 2021, the balance of RMB loans was 192.7 trillion yuan, an increase of 11.6% year-on-year, an increase of 19.95 trillion yuan from the beginning of the year, and an increase of 315 billion yuan year-on-year.

　　The credit structure continued to be optimized.

The growth rate of medium and long-term loans to the manufacturing industry was 31.8%, of which medium and long-term loans to high-tech manufacturing industries increased by 32.8% year-on-year.

The balance of inclusive small and micro loans was 19.2 trillion yuan, a year-on-year increase of 27.3%, and the number of inclusive small and micro credit customers was 44.56 million, a year-on-year increase of 38%.

　　Continue to deepen the reform of interest rate marketization and give full play to the reform of the loan market quoted rate (LPR).

The corporate loan interest rate for the whole year of 2021 is 4.61%, down 0.1 percentage point from 2020 and 0.69 percentage point from 2019, the lowest level in the more than 40 years of reform and opening up.

　　The money supply and social financing scale increased reasonably, which strongly supported the real economy.

At the end of 2021, the balance of broad money supply (M2) was 238.3 trillion yuan, a year-on-year increase of 9%.

Preliminary statistics show that the stock of social financing at the end of December was 314.13 trillion yuan, a year-on-year increase of 10.3%.

Loans issued by financial institutions to the real economy remained stable.

In 2021, domestic and foreign currency loans to the real economy will increase by 20.11 trillion yuan, basically the same as in 2020, and an increase of 3.36 trillion yuan over 2019.

　　Prevent and resolve major financial risks

　　The "Report" pointed out that important achievements have been made in preventing and resolving major financial risks.

Macro risks were effectively controlled.

In 2021, adhere to a prudent monetary policy, manage the general monetary gate, and stabilize the macro leverage ratio.

At the end of 2021, the macro leverage ratio fell to 272.5%.

　　Safely handle key high-risk institutions.

Resolutely and orderly took over 10 "tomorrow-based" financial institutions including Baoshang Bank, Hua Xia Life Insurance, and New Era Securities, and successfully completed the bankruptcy liquidation of Baoshang Bank.

The risk disposal of Huaxin Group has been basically completed, the risk disposal of Anbang Group has come to an end, and the reorganization plan of HNA Group has been approved by the court.

The People's Bank of China, together with the China Banking and Insurance Regulatory Commission, will guide relevant local governments to properly handle the risks of large enterprises such as Founder Group and the risks of many small and medium-sized financial institutions such as Hengfeng Bank.

　　Focus on rectifying financial chaos and severely crack down on financial illegal and criminal activities.

Clear out unlicensed Internet asset management institutions, unlicensed payment institutions, equity crowdfunding platforms, and illegal online mutual aid platforms.

All P2P online lending platforms have withdrawn from operations.

Close domestic virtual currency trading and token issuance financing platforms.

Shut down and block domestic and foreign Internet foreign exchange trading platforms.

Carry out a special campaign against illegal fund-raising crimes, and severely crack down on illegal financial activities such as disorderly handling of finance and illegal fund-raising.

　　Shadow banking risks have largely subsided.

The "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions" and supporting implementation rules were issued in a timely manner. The scale of asset management products increased steadily, the structure was continuously optimized, the proportion of net worth products increased significantly, and risks were significantly reduced.

The high-risk shadow banking business continued to be dismantled, and the systemic risks of shadow banking were significantly reduced.

　　Achieving stable total volume and excellent structure

　　At present, my country's economic development is facing the triple pressure of demand contraction, supply shock, and weakening expectations, and the external environment has become more complex, severe and uncertain.

The "Report" proposes that in the next stage, efforts will be made to increase financial support for key areas and weak links, so as to achieve a better combination of stable total volume and excellent structure.

　　Maintain a stable growth in the total amount of money and credit.

Improve the money supply control mechanism, maintain reasonably sufficient liquidity, guide financial institutions to vigorously expand loan issuance, enhance the stability of the growth of total credit, maintain the growth rate of money supply and social financing scale basically match the nominal economic growth rate, and maintain macro leverage rate is basically stable.

　　Maintain steady optimization of credit structure.

Structural monetary policy tools are actively "additional", implement market-oriented policy tools to support small and micro enterprises, make good use of carbon emission reduction support tools and special re-lending to support the clean and efficient use of coal, and guide financial institutions to increase credit growth in areas with slow credit growth. We will increase the support for small and micro enterprises, technological innovation and green development with precise efforts.

　　Promote the reduction of comprehensive financing costs for enterprises.

Improve the formation and transmission mechanism of market-oriented interest rates, give full play to the efficiency of the reform of interest rates quoted in the loan market, stabilize the cost of bank liabilities, and guide corporate loan interest rates to decline.

　　Keep the RMB exchange rate basically stable at a reasonable and balanced level.

Focusing on me, properly handling the balance between internal and external equilibrium, based on market supply and demand, enhancing the flexibility of the RMB exchange rate, giving play to the function of the exchange rate to adjust the macro economy and the automatic stabilizer of the balance of payments, strengthen the macro-prudential management of cross-border capital flows, and strengthen the Expectation management, and guide market entities to establish the concept of "risk neutrality".

Xu Peiyu

Xu Peiyu