What is the meaning of deposit rate? Why does the central bank cut the deposit rate sharply
4hw.com.cn: the bank reserve ratio is called the bank reserve ratio. It refers to the deposits in the central bank prepared by financial institutions to ensure that customers withdraw deposits and settle funds. The ratio of the required reserve ratio of the central bank to the total deposits is the deposit reserve ratio.
Deposit reserve ratio has always been a topic of concern to many people. Recently, according to the latest report, the central bank lowered the deposit reserve ratio sharply. After the news came out, many netizens came to watch it! For the matter that the central bank lowered the deposit reserve ratio sharply, some netizens asked what the purpose of doing this was? What is the benefit of the central bank's sharp reduction of deposit reserve ratio?
On April 17, the central bank announced to reduce the deposit reserve ratio by 1 percentage point, which is a substantial reduction. Looking back on some changes of monetary policy in the past two years, we can draw a conclusion that China's monetary policy is returning to normalization, but this normalization is different from that in Europe and the United States. The Central Bank of Europe and the United States has reduced the balance sheet by selling bonds and increasing interest rates, while the Central Bank of China has reduced the balance sheet by increasing interest rates The reduction of the deposit reserve ratio is also supported by the policy of increasing interest rates.
In fact, in essence, the sale of bonds by European and American banks to financial institutions is a process of fund recovery, while the release of deposit reserve by the Central Bank of China is a process of fund release to the market. From these two behaviors, we can see that in recent years, the Central Bank of China and the Central Bank of Europe and the United States have different operation paths, as well as the final process of monetary policy normalization.
However, China's economy is still in a downward stage, so China's monetary policy is too big in my opinion.
According to the statement of the central bank, the purpose of this reduction is to reduce the RMB deposit reserve ratio of the above-mentioned banks by 1 percentage point from April 25, 2018; on the date of reduction, banks holding unmatured MLF will use the released funds to repay the MLF of the central bank they borrowed in the order of "borrow first, repay first", and the released funds are slightly more than the MLF to be repaid. Based on the data at the end of the first quarter of 2018, it is estimated that the repayment of MLF on the day of operation is about 900 billion yuan, while the release of incremental capital is about 400 billion yuan, most of which is released to urban commercial banks and non County Agricultural commercial banks.
The central bank's statement here is to let commercial banks repay MLF funds, but in fact, MLF funds are the money borrowed by commercial banks from the central bank, which must be repaid when they are due, and now they are not allowed to repay. The central bank directly draws a line on the account, which is equivalent to the central bank's repayment for commercial banks, but the original deposit reserve is also handed over to the central bank by commercial banks, so the final effect is still a currency The process of policy normalization.
One of the big news related to the recent impact on the market is that there are media reports that the industry self-discipline agreement on the upper limit of deposit interest rate of commercial banks will be liberalized. On April 12, members of the self regulatory mechanism of market interest rate pricing held a meeting to discuss the issue of liberalizing the self regulatory upper limit of deposit interest rate of commercial banks.
If the news is true, it will be equivalent to the central bank raising interest rates many times, which has a great impact on the market. The stock market started to fall from Monday, continued to fall on Tuesday, and has been down 3% in a row. The index reached 3066. If it continues to fall, it may fall below 3000, which will cause great pressure on a large number of pledge financing stocks. Even in such a case, the regulator has not denied the news of the liberalization of the self-discipline agreement of the interest rate industry. It can be judged that the regulator will adjust the deposit reserve ratio in the following way to pave the way for the future liberalization of the self-discipline agreement of interest rate.
According to the Research Report of securities companies, the interest margin between the market interest rate and the benchmark interest rate is about 100 bp. If the two really close, the deposit interest rate will need to rise by about 70 to 80 BP in the next 1 to 2 years. In fact, this is equivalent to the unilateral increase of three interest rates in two years.
Since the fourth quarter of 2016, the market interest rate has been rising steadily with the Fed's interest rate increase, but the deposit interest rate has stopped moving, and there is arbitrage space in the middle. Market interest rates have risen 105bp in the short-term (one-year period) and 95bp in the long-term (10-year period), both of which are around 100bp. However, the statutory interest rate deposits, no matter the short-term three months or the long-term one-year term, have not been adjusted. In other words, the spread between the two has widened by 100bp in the past year. To close the gap, we need to do the opposite. The securities firm expects that with the liquidity expectation turning warm in the year, the money market interest rate still has the possibility of further downward, with the range expected to be 20-30bp. Accordingly, in the next 1-2 years, the deposit rate needs to rise by about 70-80bp. In fact, this is equivalent to the unilateral increase of three interest rates in two years.
The above judgment may be based on the central bank's ability to release liquidity, but it is also an assumption. If there is no large amount of liquidity release, then the interest rate self-discipline agreement will be released, and the deposit interest rate may rise more.
Can China's current economy bear three interest rate hikes? Of course, it is still a question, because the high cost of financing has become a major hidden danger of corporate financing, and the stock debt of enterprises is high, so the interest rate hike will undoubtedly push up the cost of debt. But here's a way to do it: not add the benchmark interest rate of deposits and loans; it will allow the interest rate of deposits to rise, including the interest rate of large certificates of deposit.
In this way, it can avoid the increase of the cost of stock loans, increase the deposit cost of current commercial banks, and alleviate the problem of debt difficulty of commercial banks; at the same time, it can also alleviate the risk of the rising cost of stock loans and debts.
In fact, due to the influence of the new regulation, the supervision has squeezed the off balance sheet business, and the bank financing has greatly shrunk. It can only pull deposits through structural deposits, which is also a kind of distortion, in fact, reducing the deposit rate is also a correction for the above behaviors of commercial banks, especially small and medium-sized banks.
In any case, after the central bank follows the international mainstream central bank into the interest rate increase channel, commercial banks will have to pay for the high profits before by releasing the deposit reserve ratio to mitigate the risk of interest rate increase. All these costs need to be borne by commercial banks, which also shows why commercial banks led the market slump.