Forced Policy To Boost The Financial "Deleveraging" Is Not Loose And Tight.

Last year and for a long time ago, because of the relatively loose capital market, many financial institutions had the opportunity and opportunity to mismatch and arbitrage investment.

In fact, many institutions are able to earn stable returns by borrowing overnight overnight funds and investing in longer term assets. When the overall interbank market interest rate is at a low level, there is almost no risk in this way of profit.

In the first half of this year, the central bank adopted a variety of means to "push" excessive speculative financial institutions to reduce leverage.

On the one hand, the open market operation reverse repo rate and MLF (interim lending convenience) interest rate has been uplink, releasing a neutral tightening signal.

Data show that in the first half of this year, the center of interest rate in money market was obviously upward.

In May, the weighted average interest rate for interbank lending was 2.88%, up 44 basis points from 2.44% in December last year.

The weighted average interest rate for pledged repurchase is 2.92%, up 36 basis points from 2.56% in December last year.

On the other hand, from the first quarter of 2017, the central bank formally incorporated the off balance sheet financing into the scope of generalized credit indicators in the MPA assessment to reflect comprehensively the credit expansion of the banking system. This is also an important measure to implement the risk prevention and deleveraging requirements and promote the steady operation of the banking system.

At the same time, in April this year, the CBRC issued several heavy regulatory documents and launched on-site inspections. It means excessive expansion and irregularities of financial institutions, and the behavior of financial institutions such as leverage, interbank expansion and regulatory arbitrage.

From the published data, deleveraging has been effective.

At the end of 5, M2 grew by 9.6% over the same period last year, the first time it fell below 10%, a record low.

The central bank official said, "this is mainly reflected in the financial system to reduce internal leverage."

The official said that with the implementation of a sound and neutral monetary policy,

Gradually, the financial system took the initiative to adjust business and reduce internal leverage. The expansion of subjects such as equity and other investments in commercial banks highly related to industry, information management, off balance sheet activities and shadow banking activities slowed down, resulting in a corresponding decline in deposits and M2 growth.

In May, the share and other investment subjects of commercial banks increased by less than 1 trillion and 420 billion yuan, and the growth rate of dropdown M2 increased by about 1 percentage points.

The change of the holders of currency also confirms: 5 the M2 held by the financial system only increased by 0.7% at the end of the month, 8.9 percentage points lower than the overall M2 growth rate. Meanwhile, the M2 held by the non-financial sector increased by 10.5%, which was 0.9 percentage points higher than the overall M2 growth rate.

"It is estimated that with the deepening of deleveraging and the further return of finance to the real economy, M2 growth, which is lower than in the past, may become a new normal."

The person in charge said.

It is worth noting that under the moderate and neutral monetary policy keynote, the central bank also flexibly grasps the intensity and rhythm of the open market operation, maintains a balance between deleveraging and maintaining the basic stability of liquidity, so as to avoid causing new risks in the process of deleveraging.

At the end of 6, there is often a period of greater volatility in market liquidity.

However, from the recent market situation, the capital side is still showing a "tight balance", but there is no obvious liquidity tighter.

Insiders interviewed by reporters said that this is closely related to the central bank's overweight open market operation and prior communication with the market.

"Before the market is expected to be relatively tight in June, but the actual situation is not as tight as expected, and also less than the intensity of the April capital side, which is related to the central bank ahead of time to do some work."

A large financial market department told reporters.

The central bank's open market operation room also said that commercial banks actively get to the market after obtaining funds from the central bank, and the funds are layered and smoothly conducted. The interest rate of the key market period of the money market is stable, and the financial institutions' confidence in the smooth run through the end of 6 is significantly enhanced.

In the past week, with the increase of fiscal expenditure at the end of the month, the liquidity of the banking system will be supplemented, and the central bank will suspend the open market counter repurchase for a long time and reduce liquidity.

Analysis of the industry, this reflects the central bank's open market operation and the rhythm of the more flexible characteristics.

In the first quarter of 2017, the central bank made clear in its executive report on China's monetary policy in the first quarter of 2017 that in recent years, with the change in the way of money supply, the central bank's open market operations mainly use reverse repo and MLF, with the aim of "cutting the peak and filling the valley", so as to keep the liquidity of the banking system basically stable.

Market participants are most concerned about the trend of monetary policy in the second half of the year.

Most market participants say the central bank is robust and neutral.

The tone will not change. However, in the future, when monetary policy is pushing deleveraging, it will pay more attention to the intensity and rhythm, and better control the macro liquidity balance.

Chen Yulu, vice governor of the people's Bank of China, recently said at the Tsinghua Wudaokou global financial forum that a sound neutral monetary policy will be implemented, the monetary gates should be adjusted, and the basic stability of liquidity should be maintained. Efforts should be made to make money neither loose nor tight, and manage the total demand in the supply side structural reform, so as to create a moderately moderate monetary and financial environment for structural reform.

Li Bo, director of the monetary policy division of the people's Bank of China, further explained "not loose nor tight" when speaking at the same forum.

He said that the so-called "tight" means that the monetary policy should support the normal and reasonable growth of the economy, maintain the basic stability of liquidity, maintain the basic stability of the financial system and prevent systemic occurrence.

The so-called "loose" means that monetary policy can not be too loose, otherwise the corpse enterprises and excess capacity will be difficult to be removed.

"Although the market leverage has been knocked out, some small and medium financial institutions still have certain expectations for easing monetary policy of the central bank, and there is still a chance to continue leverage with the opportunity of market adjustment.

I have judged that deleveraging is not in place, and that the long-term trend of monetary policy keynote should remain robust and neutral.

The above Department of Finance and marketing said.

"Adhere to the general principle of actively and steadily deleveraging.

Of course, attention should also be paid to strengthening supervision and coordination, grasping the intensity and rhythm of policies, stabilizing market expectations, and making structural adjustment stable and orderly overall.

The people's Bank of China will continue to flexibly apply the combination of various monetary policy tools according to the economic fundamentals and market supply and demand, grasp the balance between deleveraging and maintaining the basic stability of liquidity, and create a moderately moderate monetary and financial environment for the structural reform of supply side.

The central bank official said.

Jilin Hao, an analyst with Huachang securities, said the central bank may not be too lenient.

On the one hand, the direction of the central bank to maintain a tight liquidity balance has not changed; on the other hand, the liquidity management of the central bank has been more flexible since this year. In the direction of maintaining a tight balance of capital, the flexibility of the policy operation is strengthened and the financial deleveraging is finally completed.

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