The central bank’s reserve requirement ratio cut came as scheduled. Nearly three hours after the stock market closed yesterday, the central bank announced that it would lower the deposit reserve ratio of by 20.25 percentage points. This reduction in the reserve requirement ratio will release 530 billion yuan. In fact, it was already in the State Council meeting a few days ago, so the market did not mean that the central bank's measures to lower the reserve requirement ratio yesterday. In fact, it responded in advance in the stock market. The banks and real estate sectors showed a good performance on Friday, which was also an "premonition" of the central bank's reserve requirement ratio cut in advance.
Reserve reduction is a professional term. Many netizens do not know the principle of the reserve requirement ratio cut, the difference and significance of rate cut, and the author will use simple language to explain the principle and significance of the reduction of the standard.
1. What is the principle of reducing the reserve requirement ratio?
The full name of "reducing the reserve requirement ratio" is "reducing the reserve requirement ratio", which consists of verbs and nouns, and the core is " reserve requirement ratio ". First of all, let's understand what a reserve requirement is. As the name implies, it is the reserve when depositing. When the depositor deposits the money to the bank, the money forms the bank's assets and liabilities, and the bank can lend the money to form interest income.
Theoretically, if the depositor deposits 100 yuan into the bank, the bank can lend the 100 yuan to Company A. After obtaining the 100 yuan loan, it will deposit it into the bank. The bank can lend the 100 yuan to Company B. This cycle can continue in theory.
But the reality is that the money deposited by depositors must be withdrawn and will not be kept in the bank. Therefore, the bank will not lend all of these deposits after receiving them, but will retain a part to prevent depositors from running, and use it for depositors to withdraw cash on daily basis. This kind of "retention" has become an inherent operation of banks. When the banking industry develops to a higher level later, with the "last bank", the situation has changed again. After the bank gets depositors' deposits, on the one hand, in order to cope with depositors' cash withdrawal needs, a part will be retained. On the other hand, the central bank will adjust the amount of funds of commercial banks through the "retention" ratio, thereby achieving the purpose of adjusting the amount of social funds.
Therefore, the central bank requires that every time the bank receives a deposit, it needs to withdraw a certain proportion to deposit it to the central bank. This is the source of the deposit reserve, and the withdrawal ratio is the deposit reserve ratio. For example, when the bank receives depositor A100 yuan, the central bank requires that it take out 10 yuan to deposit it to the central bank. This 10 yuan is the deposit reserve, and 10//100 is the deposit reserve ratio, which is the deposit reserve ratio of 10%.
It is precisely because of the existence of the reserve requirement ratio that the central bank can control the ability of commercial banks to create credit by adjusting this value. The higher the reserve requirement ratio, the lower the ability of the bank to lend (the ability to create credit). For example, 100%, then the bank has no ability to lend. If it is 0, it is infinitely large. Under normal circumstances, the relationship between the final loan scale and the reserve requirement ratio is the reciprocal of this ratio. For example, the reserve requirement ratio is 10%, then the bank's ultimate ability to lend is 10 times, that is, for every 100 yuan deposit received, a loan of 1,000 yuan can be finally created. If the reserve requirement ratio is 5%, then a loan of 2,000 yuan can be created by 100 yuan.
This time the central bank reduced the deposit reserve ratio by 0.25 percentage points, and the average deposit reserve ratio of financial institutions was reduced to 7.8%. The corresponding currency multiplier of this ratio is 12.8 times, which means that a deposit of 100 yuan can create a loan scale of 1,280 yuan.
After knowing the principle of lowering the reserve requirement ratio, we can understand that lowering the reserve requirement ratio actually allows banks to have more money to lend, and there will be more working capital in society, and it will be easier for individuals and enterprises to obtain loans from banks.
2. What is the difference between interest rate cuts and reserve requirement ratio cuts?
Rate cuts and reserve requirement ratio cuts are the two most commonly used monetary policy tools by the central bank, which are often cross-used. Since this year, the central bank has experienced many interest rate cuts, but this is the first time to lower the reserve requirement ratio. What is the difference between interest rate cuts and reserve requirement ratio cuts?
is actually quite easy to understand. Cutting the reserve requirement ratio is a supply-side reform, increasing supply capacity, expanding market supply, and allowing the market to obtain more currency. A interest rate cut is the price of currency, and a interest rate cut is the price of price. Currency becomes cheaper, specifically, the cost of obtaining loans from banks becomes cheaper.
This is the same as when we sell things. If manufacturers produce more goods, consumers will naturally be able to buy goods more easily, and due to the increase in supply, the price will generally be lowered. Rate cuts mean directly reducing prices and promoting promotions without increasing supply, which is simple and crude.
From the length of the past decade, the deposit reserve ratio has generally shown a declining trend. From 2007 to 2011, it was a process of gradually increasing the deposit reserve ratio. At that time, because there was too much liquidity, M2 was flooded, so Zhou Xiaochuan, the governor of the central bank, built a reservoir by continuously increasing the deposit reserve ratio. The deposit reserve ratio of large financial institutions increased to 21.5% when it was the highest. This means that a deposit of 100 yuan can only create a loan scale of less than 500 yuan. However, it has been significantly reduced in 11 years, and the ability of banks to create credit has been greatly improved.
At the same time, interest is basically showing a downward trend, with two peak points in 2007 and 2011, with the benchmark loan interest rates of 7.47% and 6.56% respectively. It dropped to 4.9% at the end of 2015, and now it has dropped to 4.3%. My personal opinion is that it will decrease in the future. This is because the growth rate of China's economy has slowed down. The economic growth rate actually determines the interest rate of the entire society. The economy grows quickly and funds make money quickly. Naturally, they can withstand higher capital costs. On the contrary, funds require higher capital returns. However, after the economic growth slows down, the rate of return of funds that can be obtained by funds will also decrease, and the costs that funds can bear are also reduced. Whether it is a rate cut or a reserve requirement ratio cut, it is actually to provide the market with reasonable liquidity, to reduce the cost of social financing , and to allow more companies to borrow loans and engage in economic activities.
Reservoir cuts and interest rate cuts are both good for the stock market and the real estate market. Recently, many departments are preparing to stabilize the real estate market and prevent further declines in the real estate market. To maintain the stable development of real estate, many banks have jointly granted more than one trillion yuan to real estate companies. On Friday, the real estate and banking sectors led the two markets, and this is also the reason behind it. Mortgages have always been the best asset of banks, very stable and have high returns.
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