On the evening of February 8, the People's Bank of China released the report on China's monetary policy implementation for the fourth quarter of 2023, revealing a lot of information that is different from the previous quarter. In the main ideas of the next phase of monetary policy, which has attracted much attention, the central bank mentioned:
In terms of monetary policy, the central bank pointed out that it is flexible, moderate, precise and effective. Reasonably grasp the relationship between the two largest financing markets of bonds and credit, accurately grasp the law and new characteristics of money and credit supply and demand, guide the reasonable growth and balanced delivery of credit, maintain reasonable and abundant liquidity, and keep the scale of social financing and the amount of money matching the expected goals of economic growth and the highest level.
The central bank recently pointed out that it will focus on improving the efficiency of loan use, and provide better support for sustainable economic development by switching to more efficient business entities after some loans expire, optimizing the investment direction of new loans, and promoting necessary market-oriented liquidation.
In terms of the real estate market, the central bank saidMake good use of the new mortgage supplementary relending tools, and increase financial support for the construction of affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the transformation of urban villagesPromote and accelerate the construction of a new model of real estate development.
In terms of exchange rate, the central bank pointed out that it will further promote the market-oriented reform of interest rates and smooth the transmission channels of monetary policy. Improve the formation and transmission mechanism of market-oriented interest rates, improve the policy interest rate system of the central bank, and guide market interest rates to fluctuate around policy interest rates. Implement a market-oriented adjustment mechanism for deposit interest rates, and strive to stabilize the cost of bank liabilities.
In terms of financial risks, the central bank pointed out that it will guide financial institutions to follow the principles of marketization and rule of lawRational use of debt restructuring, replacement and other means to support the resolution of debt risks of local financing platforms. At the same time, it is emphasized that the construction of the financial stability guarantee system should be strengthened, the accumulation and spread of financial risks should be prevented, and the bottom line of no systemic risks should be firmly maintained.
The following is the content of the "Main Policy Ideas for the Next Stage" section of the PBOC's Monetary Policy Implementation Report for the fourth quarter of 2023. The blue part is the new content in the fourth quarter, and the red part with strikethrough is the deleted content in the third quarter report
The People's Bank of China will adhere to and strengthen the party's overall leadership, take the thought of socialism with Chinese characteristics in the new era as the guide, fully implement the spirit of the 20th National Congress of the party, resolutely implement the requirements of the financial work conference, completely, accurately and comprehensively implement the new development concept, deeply grasp the political and people's nature of financial work, take promoting high-quality financial development as the theme, deepen the structural reform of the financial supply side as the main line, adhere to the general tone of seeking progress in stability, improve financial macro-control, adhere to seeking progress in stability, We will accelerate the construction of a financial power, optimize financial services, and unswervingly follow the path of financial development with Chinese characteristics. to promote high-quality financial development. Build a modern first-class banking system, strengthen counter-cyclical and cross-cyclical adjustment of macro policies, adhere to the fundamental purpose of financial services for the real economy, build a modern first-class banking system, always maintain the soundness of monetary policy, strengthen high-quality financial services, better support the expansion of domestic demand, promote the stabilization of foreign investment and foreign trade, and provide high-quality services to enhance the consistency of macro policy orientation, continue to promote economic and social development, and achieve effective qualitative and quantitative growth.A prudent monetary policy should be precise and powerful, pay more attention to cross-cyclical and counter-cyclical adjustment, enrich the monetary policy toolbox, and strive to create a good monetary and financial environment. Flexible, accurate, and effective. Rationally grasp the relationship between the two largest financing markets of bonds and credit, accurately grasp the law of supply and demand of money and credit and the new characteristics, and strengthen the dual adjustment of the total amount and structure of money. Comprehensively use a variety of monetary policy tools to guide the reasonable growth and balanced delivery of credit, maintain reasonable and abundant liquidity, and keep the growth rate of monetary and social financing scale in line with the nominal and monetary growth with the basic growth of economic growth and the expected target of the first level. We will further dredge the monetary policy, strengthen the policy transmission mechanism, enhance financial coordination and cooperation, effectively support the stability of the real economy, promote a virtuous cycle of economy and finance, promote consumption, stabilize investment, expand domestic demand, and maintain the price level at a reasonable and stable level. We will continue to deepen the market-oriented reform of interest rates, release the dividends of interest rate reform to further improve the loan market, effectively form a mechanism, give full play to the role of the market-oriented adjustment mechanism of deposit interest rates, maintain the order of the deposit and loan market, and further promote the reduction of financial institutions to promote the steady and moderate reduction of comprehensive financing costs in society. Give full play to the dual functions of monetary policy tools, both in aggregate and in structure. Support the use of debt restructuring and other means to revitalize the stock of credit, and increase the interest rate of existing loans. Structural monetary policy tools" are used efficiently. Adhere to the focus on key points, reasonable and moderate, advance and retreat", implement the increased re-lending and re-discounting quota, implement the existing tools, optimize the capital supply structure, use more financial resources to promote scientific and technological innovation, advanced manufacturing, green development and small and medium-sized enterprises, do a good job in science and technology finance, green finance, inclusive finance, pension finance, digital finance five major articles, accelerate the cultivation of new momentum and new advantages. Implement the 25 measures of "16 measures to support the private economy" of real estate, and increase financial support for the transformation of urban villages such as the construction of affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the construction of affordable housing. Adhere to the managed floating exchange rate system based on market supply and demand, adjusted with reference to a basket of currencies, based on the long-term and current, resolutely correct the pro-cyclical behavior of the market, resolutely deal with the behavior that disrupts the market order, resolutely implement comprehensive policies, stabilize expectations, prevent the risk of exchange rate overshoot, prevent the formation of unilateral consistent expectations and self-reinforcement, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. We will continue to effectively prevent and resolve small and medium-sized financial risks in key areas, guide financial institutions to actively and prudently support risk resolution in key areas such as local debt and real estate, and resolutely maintain the bottom line of preventing systemic financial risks.
First, it is necessary to maintain a moderate and stable pace in the total amount of financing and monetary credit. Comprehensively use a variety of monetary policy tools to maintain reasonable and abundant liquidity. Supporting the growth of financial institutions. In accordance with the principles of marketization and rule of law, we will meet the needs of the real economy for effective and vigorous development of direct financing, strive to strengthen the balanced allocation of loans, coordinate the credit work at the end of the year and the beginning of the year, moderately smooth credit fluctuations, enhance the stability and sustainability of total credit growth, and maintain the basic matching of the growth rate of monetary volume and social financing scale with the growth rate of the nominal economy. It is necessary to observe from a longer cross-cycle perspective, and more demandingly, and reasonably grasp the understanding and cognition of "basic matching". Efforts should be made to improve the quality and efficiency of monetary credit to support the recovery of the real economy, pay more attention to the sustainable utility of existing loans, and revitalize the relationship between the two largest financing markets, bonds and credit, which are inefficiently occupied. We will continue to promote corporate credit bonds and financial resources, improve the efficiency of capital use, revitalize existing loans, improve the efficiency of existing loans, and optimize the investment of new loans to the development of the bond market, which is equally important to support economic growth. We will continue to strengthen the analysis and monitoring of the supply and demand of liquidity in the banking system and changes in the financial market, pay close attention to the changes in the monetary policies of major central banks, carry out open market operations flexibly, effectively and effectively, and use a variety of monetary policy tools to ensure the smooth issuance of ** bonds, guide financial institutions to strengthen liquidity risk management, and maintain reasonable and sufficient liquidity in the banking system and the stable operation of money market interest rates. Support financial institutions to actively tap credit demand and project reserves, promote reasonable growth of loans, strengthen the balanced allocation of credit, enhance the stability and sustainability of loan growth, and maintain the scale of social financing and the amount of money to match the expected goals of economic growth and the highest level. Efforts will be made to improve the efficiency of loan use, and provide better support for sustainable economic development by transferring some loans to more efficient business entities after maturity**, optimizing the investment direction of new loans, and promoting necessary market-oriented liquidation.
Second, we should give full play to the guiding role of monetary and credit policies. The structural monetary policy adheres to the principle of "focusing on key points, being reasonable and moderate, and advancing and retreating", maintains the stability of relending and rediscounting policies, makes good use of inclusive small and micro loan support tools, implements various special relending tools of the existing structural monetary policy, integrates tools and programs to support scientific and technological innovation and digital finance, and continues to increase support for key areas and weak links such as HP's inclusive small and micro enterprises, manufacturing, green development, scientific and technological innovation, and infrastructure construction. We will do a good job in promoting the implementation of the "Notice on Strengthening Financial Support Measures to Help the Development and Growth of the Private Economy", continue to carry out the project of improving the financial service capacity of the evaluation of the credit policy guidance effect of small, medium, small and micro enterprises, and improve the availability and convenience of financing for private and small and micro enterprises. Guide financial institutions to continue to implement the "Guiding Opinions on Increasing Financial Support for Comprehensively Promoting Rural Revitalization and Accelerating the Construction of an Agricultural Power" to better meet the diversified financing needs of agriculture-related fields. Improve the macro-prudential management of real estate finance, meet the reasonable financing needs of real estate enterprises under different ownership systems without discrimination, and do not hesitate to lend, draw loans, or cut off loans for real estate enterprises that are operating normally. Continue to make good use of the "second arrow" to support private real estate enterprises to issue bonds for financing. Support real estate enterprises to raise reasonable equity through the capital market. Make good use of the city-specific policies to accurately implement the differentiated housing credit policy toolbox, better support the demand for rigid and improved housing, accelerate the equal treatment of real estate enterprises with different ownership systems, and promote the steady and healthy development of the real estate market. We will make good use of the new mortgage supplementary relending tools, increase financial support for the construction of "three major projects" such as affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the transformation of urban villages, and promote the acceleration of the construction of a new model of real estate development.
Third, it is necessary to grasp the balance between interest rates and exchange rates. We will further promote the market-oriented reform of interest rates and smooth the transmission channels of monetary policy. Improve the formation and transmission mechanism of market-oriented interest rates, improve the central bank's policy interest rate system, and enhance the credibility of guiding market benchmark interest rates. Continued volatility around the policy rate. Implement a market-oriented adjustment mechanism for deposit interest rates, and strive to stabilize the cost of bank liabilities. Give full play to the effectiveness of the reform of the loan market interest rate (LPR), enhance the guidance of the LPR on the actual loan interest rate, promote the steady decline in the financing cost of the real economy, standardize and strengthen the self-discipline and coordination and management of the industry, urge financial institutions to adhere to the principle of risk pricing, straighten out the pricing order of loan interest rates, and coordinate the relationship between increment, stock and other financial products. We should give full play to the important role of market-oriented adjustment mechanisms such as deposits and bond yields, stabilize the cost of bank liabilities, strengthen the sustainable relationship between financial support for the real economy, maintain the order of market competition, and promote a steady and moderate decline in comprehensive social financing costs. We will steadily deepen the market-oriented reform of the exchange rate, improve the managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies, insist that the market plays a decisive role in the formation of the exchange rate, and give full play to the function of the exchange rate as an automatic stabilizer of the macroeconomy and the balance of payments. Strengthen the management of expectations, based on the long-term and the present, and do a good job in the monitoring and analysis of cross-border capital flows, and risk prevention. Adhere to the bottom-line thinking, resolutely correct the pro-cyclical behavior of the market, resolutely deal with the behavior that disrupts the market order, resolutely prevent the risk of exchange rate overshoot, prevent the formation of unilateral consensus expectations and self-reinforcement, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. Strengthen the management of the foreign exchange market, guide enterprises and financial institutions to establish the concept of "risk neutrality", and guide financial institutions to actively provide exchange rate hedging services for small, medium and micro enterprises based on the principle of actual needs and risk neutrality, so as to maintain the stable and healthy development of the foreign exchange market.
Fourth, we will continue to deepen financial reform and open up to the outside world. Improve the legal system of the bond market, and consolidate the legal foundation of corporate credit bonds. We will continue to give full play to the leading role of the bond financing support tool for private enterprises (the "second arrow") to strengthen the bond market to support the real economy. Establish a linkage mechanism between market makers and primary dealers in the open market, promote the integration of bond underwriting and market making, strengthen the management of primary and secondary market linkage, valuation, market making and other businesses, and improve the effectiveness and transmission function of bond market pricing. acceleration and market robustness. Promote the construction of the over-the-counter bond market, guide business expansion, and improve the convenience and efficiency of individuals, enterprises, and small and medium-sized financial institutions to invest in ** bonds through over-the-counter channels. Strengthen the appropriate stratification of the money market, promote the macro-prudential management of interbank bonds, and improve the monitoring mechanism for improving the operational efficiency of the money market and diversifying the liquidity of infrastructure services. Adhere to the principles of marketization and rule of law, continue to implement the concept of "zero tolerance", and intensify the investigation and punishment of violations of laws and regulations in the bond market. We will unswervingly promote the opening up of the bond market. Promote the internationalization of the renminbi in an orderly manner, further expand the use of renminbi in cross-border ** and investment, deepen foreign monetary and financial cooperation, and develop the offshore renminbi market. We will carry out pilot projects for high-level opening-up of cross-border investment, improve the level of liberalization and facilitation of cross-border investment, and steadily promote the convertibility of RMB under the capital account and the institutional opening of the financial market.
Fifth, actively and prudently prevent and resolve financial risks. We will further improve the macro-prudential policy framework, improve the ability to monitor, assess and warn systemic risks, enrich the macro-prudential policy toolbox, and steadily expand the coverage of macro-prudential policies. Improve the supervision of systemically important financial institutions, promote systemically important banks to meet additional regulatory requirements on time, promote the relevant work of the assessment methods for systemically important insurance companies, and accelerate the establishment and improvement of the total loss absorption capacity of China's global systemically important banks, so as to effectively improve risk resilience. In a stable and orderly manner, we will actively promote risk management and reform in key regions, key institutions and key areas. Perfecting the work. Guide the financial risk monitoring, assessment, prevention and control system, and strengthen the early correction of risks. In accordance with the principles of marketization and rule of law, financial institutions should be coordinated to rationally use debt restructuring and replacement to support the resolution of debt risks of local financing platforms, consolidate the main responsibilities of local enterprises, and cooperate with local enterprises to steadily resolve stocks and strictly control increments. Sound. Strengthen the monitoring and analysis of the real estate market. Promote the resolution of small and medium-sized financial stability guarantee systems and institutional risks, and improve the early correction mechanism with hard constraints. Promote the introduction of a financial stability law as soon as possible. Fully improve the risk disposal responsibility mechanism that is consistent with rights and responsibilities and compatible with incentives and constraints, give full play to the professional risk disposal function of deposit insurance, and improve the market-oriented, law-based, and normalized disposal mechanism. function, strengthen the construction of the financial stability guarantee system, prevent the accumulation and spread of financial risks, and firmly guard the bottom line of no systemic risks.