The Central Bank Has Launched Again. Do You Understand This Council?

It is widely predicted that there will be a reduction in October and a cut in the four quarter.

Beginning this weekend, many people began to look at the central bank anxiously, hoping that the "mother" would give some good results.

However, the "central Mama" did not give a straight down to the right direction. Instead, it turned a corner and quietly released water in the form of "financial innovation".

At 5 p.m. on October 10th, the central bank posted a news release entitled "people's Bank of China promoting credit assets pledge refinancing pilot" on its official website. The full text reads as follows:

"Credit assets pledge refinancing" will not have a big impact in the short term, but after all, the central bank has opened a channel for releasing water, creating conditions for further efforts in the future.

On the whole, the announcement by the central bank in October 10th is good for the stock market and the real estate market.

To judge the central bank's water release efforts, we still need to see the M2 growth rate. If we exceed 13.5%, we should strengthen our efforts.

If more than 14%, and until the end of the year, monetary policy easing will hit a new high since 2011.

It is true that water has been released. The promotion of the "credit assets pledge reloan" pilot is not enough to solve the current liquidity problem, so it is still possible to drop the benchmark in October.

In order to implement the spirit of the State Council on increasing reform and innovation and supporting the real economy, according to the request of the people's Bank of China in 2015, the people's Bank of China launched a pilot project in 9 provinces and cities in Shanghai, Tianjin, Liaoning, Jiangsu, Hubei, Sichuan, Shaanxi, Beijing and Beijing in the early stage of the pilot project of credit assets pledge refinancing in Shandong and Guangdong.

The branch of the people's Bank of China in the pilot area of the credit assets pledge refinancing has carried out the internal ratings of the central bank for some of the loan enterprises of the local legal person financial institutions, and incorporated the credit assets with the credit rating results in line with the standard of the eligible collateral of the refinancing loan.

The pilot project of credit assets pledge refinancing is an important measure to improve the central bank's collateral management framework, which is conducive to improving the effectiveness and flexibility of monetary policy operation, helping to solve the problem of relatively inadequate collateral for local corporate financial institutions, and guiding it to expand the "three rural" and small and micro enterprises credit delivery, reduce social financing costs and support the real economy.

Some readers may say, "what does this mean? I don't understand."

Yes, what the central bank wants is this ambiguous effect.

Why do we say so? Let's take a look at the mentality of "central Mom" first.

First, the central bank is very tangled.

Since the implementation of the new administration, the government has always stressed that no strong stimulus should be taken to promote China's economic pformation through reform.

But the problem is that China's economy is hard to get back.

In addition, when the US dollar is about to enter the interest rate cycle, the global is facing the deflationary pressure brought by the liquidity downturn (the money is gradually returning to the US).

Against this background, China needs to continue to cut rates and cut interest rates.

But the problem is, when the economic crisis came, we were adding leverage (increasing the debt ratio of the whole society). When the economic crisis was drawing to a close, we were still forced to "leverage" when China's economy could be pformed. Over the past year, the government could only "cross the River by feeling the stones".

The general train of thought is: we should not discharge water, try not to release water, and can discharge less water and discharge water as little as possible.

Reflected in the central bank here, it is very tangled.

Traditional money tools that everyone can understand, such as lowering interest rates and reducing interest rates, can be used less and used as little as possible.

People do not understand much, especially those who have abbreviations in English, such as PSL, SLF, MLF, SLO, MBS and so on.

This is a financial innovation. Many people are not so sensitive. They will not give people the feeling of "wearing new shoes and going the old way".

Of course, this approach is more targeted than reducing interest rates and reducing interest rates, and can be regarded as "directional regulation".

But I have also pointed out that this has given greater administrative power to central banks at all levels, and small banks may have difficulty in "sharing rain and dew".

The "credit assets pledge reloan" is that banks have relatively high quality loan assets, pledged (or mortgaged, these two terms have different meanings, but the central bank's manuscript is obviously mixed) to the central bank and get relatively low interest refinancing from the central bank.

This is equivalent to revitalize the assets of banks and increase the total amount of funds in the whole society.

In this case, the central bank has several regulatory powers: 1, who gives money to whom not to give money; 2, who gives more money and who gives less money; 3, determines which type of "credit assets" can be pledged, mortgaged; 4, the interest rate of refinancing.

It can be seen that the central bank can pfer its preference for loans to commercial banks through such refinancing, and can also pfer its influence on market interest rates to the market through reloan interest rates.

Of course, the staff at all levels of the central bank have also gained huge "discretion".

From the perspective of monetary policy, this "reloan" undoubtedly increases the base money, which can be magnified through the monetary multiplier to form a higher generalized currency (M2).

If the reloan rate is relatively low, it will bring about the effect of cutting interest rates.

Three, is this a nuclear weapon, or is it scratchy?

about

Some people did not realize that the water drain was directly ignored. Some people thought it was an important signal for China's QE to open, which means that there might be several trillion or even one hundred thousand billion levels of large water discharge.

The Chinese stock market will also see a super bull market.

Is that so? I don't think so.

If these runways are fully opened and fully utilized, they will be equivalent to throwing "atomic bombs".

The core issue is how to balance the relationship between steady growth and promoting reform.

We need to see not only what the central bank is doing, but also the final outcome.

The core indicator is how fast the broad money M2 will grow.

As long as no more than 14%, it is hard to say that there is large-scale drainage.

You know, the M2 growth rate in 2009 is 27.7%.

The 5 years since 2011 did not exceed 14% in terms of annual calculation.