RRR interest rate cuts are not enough to achieve credit expansion.

On October 4th, 65438/kloc-0, the central bank announced that it would reduce the deposit reserve ratio of financial institutions by 1 percentage point, including 0.5 percentage points in 20 19, 15 and 65438+25 years respectively. According to preliminary calculation, the accumulated funds released by two RRR cuts are about10.5 trillion yuan. According to the official caliber, this downward adjustment has two purposes: the technical level is used to replace the medium-term lending convenience, and the economic level is used to support private enterprises and small and micro enterprises. On the first trading day after the central bank announced the RRR cut, the capital market was calm.

In fact, the market has formed a unanimous expectation for the RRR cut. Since 20 18, many macro indicators in China have shown a downward trend. This includes M 1, social financing and other indicators reflecting the financial situation, as well as infrastructure investment, social retail consumption and other indicators reflecting the needs of entities. The most important macroeconomic index PMI directly fell below the threshold in February 20 18, setting a record of 49.4. In order to hedge the downward pressure of macro-economy, the government made it clear at the Central Economic Work Conference at the end of 20 18 that to strengthen the countercyclical regulation effect of macro-policies, the monetary policy should be "moderately tight".

We believe that the actual effect of this round of RRR reduction is not ideal, mainly because of two points. First, the banking system is not short of liquidity, and second, the transmission mechanism of monetary policy is still not smooth. In the case that banks are not short of liquidity, it is difficult to really flow to the real economy by reducing the liquidity provided to banks through RRR. It can be seen from three basic facts that there is no shortage of liquidity in China's banking industry at present.

The first is the market interest rate level. Since 20 18, the 7-day weighted interest rates of Shibor, R007 and D007 have decreased significantly compared with 20 17, and the average interest rate center has decreased by 30-50 bp. This shows that the liquidity in the market in 20 18 is not tight, and the short-term interest rate is not raised as quickly as in the first half of 20 17.

Secondly, the excess deposit reserve ratio of financial institutions. 20 17 under the control of financial deleveraging policy, the excess deposit reserve ratio of financial institutions has dropped significantly. The excess deposit reserve ratio of financial institutions in the first quarter of 20 18 was the same as that in the same period of 20 17, and the excess deposit reserve ratio in the second and third quarters was 0.3% and 0.2% higher than that in the same period of 20 17 respectively. It is estimated that the excess deposit reserve ratio in the fourth quarter of 20 18 will still be higher than that in the same period of 20 17.

Third, the scale of bill financing has risen rapidly, while the interest rate of bill financing has dropped sharply. Since May 20 18, bill financing has increased rapidly. In May, the scale of bill financing increased by 1.5 trillion-1.5 trillion, and the stock of bill financing increased by 45% year-on-year. At the same time, since the second quarter of 20 18, the bill financing interest rate has dropped sharply, from 5.58% in the first quarter to 4.22%, with a decrease of 1.32%. The rise and fall of bill financing volume reflects that this part of funds is facing the pattern of oversupply. Generally speaking, banks often use bill financing as a substitute for short-term loans, and they will be more willing to do bill financing business when they have sufficient funds. As a good financing collateral, bill will naturally become the first choice for enterprises to obtain financing and banks to provide financing under the background of sufficient liquidity and high credit risk.

The more critical problem is that the credit creation mechanism is blocked, and the newly released liquidity cannot form credit expansion. The primary reason for the obstacle is the reform of financial supervision, and the most critical force comes from the new regulations on asset management and its restrictions on off-balance sheet financing. It is not difficult to understand why 20 17 is the starting point of financial deleveraging, while the credit contraction begins at 20 18. Strong financial supervision has brought about the rapid contraction of off-balance sheet financing, and correspondingly, the demand for corporate credit has been suppressed, especially in various local financing platforms. Therefore, while off-balance sheet financing is shrinking rapidly, we also see a rapid decline in the growth rate of infrastructure investment.

High credit risk also makes credit expansion difficult. As mentioned above, the liquidity of the banking sector is not tight at present, but the credit risk in the credit market is rising, which is mainly reflected in the frequent default of various bonds and the widening credit spread. Among AA-level corporate bonds, the credit spreads of downstream related industries such as home appliances, automobiles, commerce, communications and medicine continue to expand, and there is no sign of convergence so far. Although the average loan interest rate of financial institutions began to decline in the third quarter of 20 18, it mainly came from the decline of bill financing interest rate, and the general loan interest rate continued to rise. All these indicate that the credit risk is still at a high level, which limits the real sector to achieve credit expansion through bank credit or bond market. In addition, the profit differentiation of different industries further aggravates the cash flow risks faced by some industries and enterprises, which are mainly private enterprises and small and medium-sized enterprises. These risks are intertwined with credit risks, which makes it more and more difficult for finance to support private enterprises and small and medium-sized enterprises.

To sum up, RRR reduction is a necessary condition to achieve credit expansion, but not a sufficient condition. In the future, decision-making departments should start from at least three aspects, straighten out the transmission mechanism of money and credit, and improve the countercyclical adjustment effect of macro policies and the efficiency of financial markets serving the real economy.

In the short term, only by implementing a truly active fiscal policy can we achieve effective credit expansion and drive the expansion of total demand through fiscal multipliers. The central government should take more responsibility for fiscal expansion, improve the actual deficit ratio and ensure the stability of total demand. The resolution of local debts should not be rushed, and more consideration should be given to "stabilizing stocks and increasing pressure". In the medium term, we should give full play to the hedging function of credit risk mitigation tools so that financial institutions can effectively manage credit risk. While strengthening the supervision of financial institutions, efforts should be made to break the rigid payment and realize the market-oriented pricing mechanism of credit risk. In the case that the back door of local government financing has been blocked, we should clarify the position of the front door, gradually liberalize the scale restrictions of local special bonds, and improve the market-oriented operation level of special bond issuance and rating. In the long run, we should vigorously develop direct financing and establish a multi-level capital market. Realize the simultaneous opening of financial markets as soon as possible, and improve the level of competition in financial markets and the level of international operation of financial institutions.

(Article source: 2 1 Century Business Herald)