A Prudent Monetary Policy Accurate and Powerful (Sharp Finance)
Our reporter Qiu Haifeng
How effective was the prudent monetary policy in the past year?
What are the main policy ideas for the next stage?
The People's Bank of China recently released a report on China's monetary policy implementation for the fourth quarter of 2022 in response to the above-mentioned issues.
The report pointed out that a prudent monetary policy should be precise and powerful.
We will give full play to the effectiveness of monetary and credit policies, focus on stabilizing growth, employment, and prices, and promote financial support for the real economy to achieve effective qualitative improvement and reasonable quantitative growth.
Maintaining Reasonable and Stable Growth of Money and Credit
Stable currency is an important basis for stabilizing the economy, employment and prices.
The report pointed out that in 2022, the People's Bank of China will increase the implementation of prudent monetary policies and firmly support the stabilization of the macroeconomic market.
The liquidity of the banking system is reasonably sufficient.
In 2022, the People's Bank of China will comprehensively use various methods such as RRR cuts, medium-term lending facilities, refinancing, rediscounting, and open market operations to inject liquidity.
In April and December, the RRR was cut twice by 0.25 percentage points each, and the total release of long-term liquidity exceeded 1 trillion yuan.
Turn over 1.13 trillion yuan of surplus profits to the central government, and the scale of newly available funds provided to the whole society is equivalent to the strength of a comprehensive RRR cut of about 0.5 percentage points.
At the end of 2022, the excess reserve ratio of financial institutions will be 2.0%.
Credit support to the real economy has been strengthened.
According to the monetary policy analysis team of the People's Bank of China, since the second quarter of 2022, due to the impact of the new crown epidemic and the downward pressure on the economy, enterprises, especially small, medium and micro enterprises, have experienced increased operating difficulties, weakened credit demand, and loan growth has slowed down for a while.
The People's Bank of China held a symposium on the analysis of the monetary and credit situation in a timely manner to guide financial institutions to increase credit support to the real economy.
According to the report, the credit line of policy-oriented development banks was increased by 800 billion yuan last year, and the People's Bank of China guided them to invest 739.9 billion yuan in policy-oriented development financial instruments.
At the end of 2022, the balance of domestic and foreign currency loans of financial institutions was 219.1 trillion yuan, a year-on-year increase of 10.4%, an increase of 20.6 trillion yuan from the beginning of the year, and a year-on-year increase of 496.9 billion yuan.
The People's Bank of China stated that in the next stage, it will maintain a reasonable and stable growth of money and credit.
Comprehensively use a variety of monetary policy tools to maintain reasonable and sufficient liquidity, and keep the growth rate of money supply and social financing scale basically matching the nominal economic growth rate.
Support financial institutions to meet the effective financing needs of the real economy in accordance with the principles of marketization and rule of law, and enhance the stability and sustainability of total credit growth.
Maintain financial support for small and micro enterprises
On the basis of "stability", the People's Bank of China innovates and uses structural monetary policy tools to enhance the impetus for "progress" for high-quality development.
The report shows that by the end of 2022, the balance of re-loans for supporting agriculture nationwide will be 600.4 billion yuan, the balance of re-loans for small and medium-sized enterprises will be 1,417.1 billion yuan, the balance of rediscounting will be 558.3 billion yuan, and the balance of mortgage supplementary loans will be 3,152.8 billion yuan.
"In the past year, we have actively used tools such as re-loans, rediscounts, and mortgage supplementary loans to support agriculture and small businesses, and guided financial institutions to increase support for key areas of the national economy, weak links, and coordinated regional development." The People's Bank of China Monetary Policy The analysis team said that in 2022, continue to use inclusive small and micro loan support tools to continue to support the development of small and micro enterprises.
In the fourth quarter, the People's Bank of China provided incentive funds of 6.16 billion yuan to local corporate financial institutions to support them in increasing inclusive small and micro loans totaling 310.7 billion yuan.
At the same time, support tools for carbon emission reduction and special refinancing to support the clean and efficient use of coal will be implemented in parallel to support the economic transition to green and low-carbon.
In the fourth quarter of 2022, the People's Bank of China will distribute funds of 70.8 billion yuan and 23.4 billion yuan to relevant financial institutions through two tools, totaling 94.2 billion yuan.
In addition, the People's Bank of China has accelerated the implementation of special re-lending policies such as technological innovation, inclusive pensions, transportation and logistics, and equipment renovation.
Support financial institutions in reducing interest rates in stages for inclusive small and micro loans and toll road loans.
Set up a guaranteed delivery housing loan support plan to support financial institutions in granting guaranteed delivery housing loans to sold overdue and difficult-to-deliver residential projects.
The report clarifies that the stability of re-loan and re-discount policies will be maintained, and inclusive and continuous financial support will continue to be provided to agriculture-related, small and micro enterprises, and private enterprises.
Implement inclusive small and micro loan support tools, and maintain financial support for small and micro enterprises.
Continue to implement carbon emission reduction support tools and support special refinancing for clean and efficient use of coal in parallel.
Make good use of scientific and technological innovation re-loans and special re-loans for equipment renovations to effectively meet the credit needs for equipment renovations and renovations in the manufacturing industry, social service fields, small and medium-sized enterprises, and individual industrial and commercial households.
Continue to promote interest rate liberalization reform
In the past year, the market-oriented reform of interest rates has been steadily promoted, and the actual loan interest rate has dropped significantly.
The report shows that since 2022, the leading one-year loan market quotation rate (LPR) and the LPR over five years will decrease by 0.15 and 0.35 percentage points respectively.
In April, a market-based adjustment mechanism for deposit interest rates was established to urge banks to reasonably adjust deposit interest rates with reference to the bond market interest rate represented by the 10-year treasury bond yield and the loan market interest rate represented by the 1-year LPR; in September, the main Banks took the initiative to lower the listed deposit rate and the upper limit of internal pricing authorization in accordance with changes in market interest rates, and other banks followed up with adjustments, marking an important step in the liberalization of deposit interest rates.
"Last year, the lower limit of the first-home loan interest rate was also relaxed." The monetary policy analysis group of the People's Bank of China introduced that the lower limit of the first-home loan interest rate at the national level was lowered from the corresponding period LPR to LPR minus 20 basis points, and the second-home loan interest rate policy remained unchanged. Unchanged; the interest rate of the first set of personal housing provident fund loans will be lowered by 0.15 percentage points to better support the rigid housing needs of residents.
The report proposes that the market-oriented reform of interest rates will continue to be promoted, and the transmission channels of monetary policy will be unblocked.
Improve the market-oriented interest rate formation and transmission mechanism, improve the central bank's policy interest rate system, and guide market interest rates to fluctuate around policy interest rates.
Implement the market-based adjustment mechanism for deposit interest rates, and focus on stabilizing the cost of bank liabilities.
Give full play to the effectiveness of the loan market quotation interest rate reform, and promote the steady and moderate reduction of corporate financing costs and personal consumption credit costs.
(People's Daily Overseas Edition)