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The central bank's first adjustment of the deposit reserve ratio this year is the fourth increase in the past three months

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The central bank's first adjustment of the deposit reserve ratio this year is the fourth increase in the past three months

  • Categories:Company News
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  • Time of issue:2021-11-30 14:59
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(Summary description)Large financial institutions increased to 19% and hit a record high, the fourth increase in the last three months

The central bank's first adjustment of the deposit reserve ratio this year is the fourth increase in the past three months

(Summary description)Large financial institutions increased to 19% and hit a record high, the fourth increase in the last three months

  • Categories:Company News
  • Author:
  • Origin:
  • Time of issue:2021-11-30 14:59
  • Views:
Information

Large financial institutions increased to 19% and hit a record high, the fourth increase in the last three months
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   News from this newspaper The central bank immediately tightened after the start of the new year less than a month ago. Yesterday, the People's Bank of China decided to raise the RMB deposit reserve ratio of depository financial institutions by 0.5 percentage points from January 20, 2011. This is the fourth time the central bank has raised the deposit reserve ratio in the last three months, and it is also the first time this year.
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   Locked funds over 350 billion yuan
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Deposit reserve refers to the deposits in the central bank prepared by financial institutions to ensure that customers withdraw deposits and fund clearing needs. The ratio of deposit reserves required by the central bank to its total deposits is the deposit reserve ratio. After this increase, large-scale The deposit reserve ratio of financial institutions has reached 19%, a record high, and some financial institutions that have implemented differential deposit reserve ratios have to implement the 20% standard. After the increase in the deposit reserve ratio of small and medium financial institutions, it will also be as high as 15.5%.
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   The deposit reserve ratio of 19% means that after the bank absorbs 100 yuan in deposits, it has to hand over 19 yuan to the central bank, and the remaining 81 yuan can be used for lending. By increasing the deposit reserve ratio of banks, the central bank will release a signal of tightening liquidity, which is regarded as one of the three great axes of macro-control.
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  According to previous data from the Central Bank, my country’s RMB deposit balance reached 71.82 trillion at the end of 2010. Based on this calculation, the increase in the deposit reserve ratio can roughly lock up more than 350 billion yuan in commercial bank funds.
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  Analyzed that it intends to tighten liquidity
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  Analysts believe that the current two major channels for liquidity investment-credit and foreign exchange funds are both showing a rapid growth trend, and the central bank's move is intended to tighten liquidity. Driven by the interests of "early release, early benefit" and the expected impact of monetary policy tightening, there was another credit blowout at the beginning of the year. According to media reports, in the first week of the new year, financial institutions' credit loans have approached 500 billion yuan. In terms of foreign exchange funds, foreign exchange funds have maintained a high growth trend since the second half of last year. In December, foreign exchange accounts increased by 403.3 billion yuan.
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Zhao Qingming, a senior researcher at the Research Department of China Construction Bank (7.370, -0.12, -1.60%), said that the most direct impact of raising the deposit reserve ratio is to control the lending capacity of banks, which makes the bank’s capital tight, affects the bank’s asset allocation and makes it Liquidity becomes tighter. It has little effect on other areas, such as the stock market.
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In order to effectively manage liquidity, the central bank will reform the credit management system this year. It will calculate and implement the differential deposit reserve ratio of commercial banks on a monthly basis. A few days ago, the governor of the central bank Zhou Xiaochuan said that in the next few years, financial reforms must establish and improve counter-cyclical monetary credit. The dynamic control mechanism combines the total adjustment of money, credit and liquidity management with the establishment of a macro-prudential policy framework, implements dynamic adjustment measures for differential reserves, enriches and supplements policy tools, and guides the moderate growth of money and credit.
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  ■ Explain doubts
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  1 Is there an upper limit on the deposit reserve ratio?
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   There is no upper limit in theory, and some believe that it should not exceed 25% in operation
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   Since November last year, the central bank has raised the deposit reserve ratio four times, and the deposit reserve ratio standards implemented by commercial banks have repeatedly reached historical highs. How much room does the deposit reserve ratio increase?
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Guo Tianyong, a professor at the Central University of Finance and Economics, said that when the People’s Bank of China first performed its central bank functions in 1984, the statutory reserve ratio was stipulated according to the nature of deposits, 40% for savings deposits, 20% for corporate deposits, and 25% for rural deposits. This is because the central bank can concentrate Raise more funds to adjust surplus and deficiencies through refinancing and other means. The Bank of Mexico has also stipulated a statutory reserve ratio of more than 30%. In theory, there is no upper limit for the deposit reserve ratio.
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   However, judging from the current realistic regulatory indicators, the room for upward adjustment of the deposit reserve ratio may be relatively limited. Barclays Capital stated that since the China Banking Regulatory Commission requires that the loan-to-deposit ratio of banks should not exceed 75%, that is, the loan ratio should not be higher than 75%, so the upper limit of the deposit reserve ratio of 25% is reasonable, otherwise medium-sized joint venture banks will not have enough Deposits pay loans, which in turn restricts the healthy development of commercial banks.
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  2 Is the possibility of a recent interest rate hike reduced?
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  Recycling liquidity is a consensus, and experts have different opinions on the impact of interest rate hikes
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   Deposit reserve ratio and interest rate hike are two methods that are controlled by quantity and price respectively. Whether frequent increase of deposit reserve ratio also reduces the possibility of interest rate hike in the short term? Experts in the industry have different views on this.
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   Professor Guo Tianyong of the Central University of Finance and Economics said that the central bank once again raised the deposit reserve ratio to manage liquidity flexibly and prevent banks from recurring credit blowouts at the beginning of the year. At the same time, it can avoid the situation of stronger inflation expectations that may easily occur before the holiday. But this does not rule out the possibility of the central bank raising interest rates around the Spring Festival.
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   Xia Bin, a member of the Central Bank’s Monetary Policy Committee, said last night that the central bank’s increase in the reserve ratio is intended to recover the excessive liquidity in the market. Xia Bin believes that the current excess liquidity is due to excessive foreign exchange funds. The increase in the reserve ratio is to recover liquidity, and does not mean that the central bank has to tighten money. He said that the central bank did not choose to raise interest rates because the impact of interest rate hikes on the recovery of liquidity requires a series of policy transmission mechanisms, which have a delay effect in time, and the effect is not as direct and obvious as raising the deposit reserve ratio.
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   But Teng Tai, chief economist of Minsheng Securities, said that the increase in the deposit reserve ratio may mean that the possibility of raising interest rates before the Spring Festival is reduced. The CPI in December last year is expected to fall from a high level. Based on this judgment, the probability of raising interest rates before the Spring Festival is unlikely.
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  ■ Influence
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   The stock market is short-term bearish
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   Regarding the central bank’s increase in the deposit reserve ratio, Dacheng Fund said yesterday that the tightening policy in the short term will affect the profitability of listed companies and put a certain pressure on stock prices. Li Daxiao, director of the Yingda Securities Research Institute, believes that the upward adjustment will have a negative impact on the market. There may be some shocks in the short term, but it will not affect the market's upward trend.
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Zhang Guojiang, an analyst at China Securities (8.590, -0.01, -0.12%), has a more pessimistic view. This will have a greater negative impact, and the central bank may continue to introduce related austerity policies, and the market may continue to fall.

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