Interest Rate Liberalization: China Spends Too Much Financial Resources.

1, under the coordination of the SFC, the "debt generation crisis" of the Treasury bond market has been temporarily resolved. To tell the truth, this big event has once again caused a cold sweat in China's financial market. Now we know that it is shocking that some financial institutions have played such a large "leverage" in the bond market. Of course, management must manage, because such credit enlargement has made bond prices too high, seriously affecting the pricing of China's financial market. The craziest year of August, China's 10 year period (including the remaining 10 years or more) of treasury bonds, the latest year's yield has fallen below 2%, far from the central bank and money market for China's market interest rate normal expectations.

2, treasury bond yield partially bears the function of China's benchmark interest rate, and the yield curve of treasury bonds is the basis for pricing all financial commodities. If this price changes abnormally, it is bound to distort the structure of China's financial market. This is a big problem, so the central bank or the SFC will be able to control this matter. The question is, does China's financial institutions do not understand this? Do not know that there is a huge policy risk in such a market? Why would it be too eager to help? I think this is exactly what China's financial regulators should consider carefully.

3, in fact, in my view, this kind of thing is the same as last year's stock market leverage, and Internet financial turmoil is the inevitable result of excessive financial incentives for regulators. Historical facts tell us that financial innovation is a two major proposition in global financial markets: first, how to enlarge "leverage"; and second, how to hedge the risk of "leverage" magnification. As long as we find the so-called "hedging way", we can enlarge the lever accordingly. But unfortunately, almost all the financial risks that have occurred for decades have been closely related to "leverage". Among them, the biggest risk lies in the "loss of liquidity".

4, this is not the question of "acting on behalf of the turmoil". Take the "Dai Zheng" mode (actually through repeated mortgage and multiple repurchase agreements to enlarge the scale of investment in bonds) as an example, I firmly believe that such a huge amount. High leverage After holding treasury bonds, we must use hedge futures to hedge, but when the Treasury bond futures market loses liquidity and is unable to sell cash at all, the entire capital circulation system will surely be knocked down by "spot run". No matter how big the future income is, the leveraged cash flow is bound to be a danger to the holders of highly leveraged treasury bonds. Luckily, the gains of the securities can still cover losses, otherwise it will be bankrupt.

5, of course, there is another major risk. " Mismatch of investment and financing term " The funds absorbed by national securities through bond repurchase are all short-term, but the Treasury bonds invested are long-term. Under the background that the national debt can not be dealt with immediately, any change in market interest rates will deal with short-term financing in the dangerous period. If this time, Guo Hai securities's credit ability is questioned, and the default of the old and new debt chain, even if it is a very short and small scale breach, will immediately arouse the doubts and fears of creditors, and immediately lead to runs and crises.

6, this is the reality, but we really do not want to see this happen frequently. Because capital As a result of mutual accommodation, the financial market is linked together. Any problem at any point will become a problem on the surface. Once there is a problem on the surface, the pillar of the whole economy - the real economy will be threatened and become a crisis of China's economic building. So I think China's finance must discard the "Wall Street atmosphere", and we must eradicate the wrong concepts of financial capital being supreme and what we do. The demand for finance in the real economy is nothing more than debt financing and stock financing. There is no need for the financial market to have so many "flowers and intestines". However, we regret to see that China's financial "more and more flowers" are more and more.

7, yes, interest rate liberalization requires a large number of interest rate markets to price Renminbi currencies. But who can tell me how much financial resources need to be occupied for the marketization of interest rates? How much leverage do financial institutions need to use? How much is the cost of China's economy? We can't compete with the United States. The US dollar price takes up most of the financial resources of the world. The US dollar price makes Wall Street use 60 to 200 times leverage. Do we need to pay such a price? If so, how much financial resources can be available in China's real economy? In my view, in recent years, the rapid expansion of China's money supply has failed to enter the real economy, but the currency speculation has been in full swing.

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