2014-09-17

About that "Stimulus"

China Joins ECB in Adding Stimulus as Fed Scales Back
China’s central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world’s biggest economies as the U.S. reduces stimulus.

The People’s Bank of China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the deepest concern yet with an economic slowdown.

This isn't a stimulus, even if true. It is filling a giant hole in the credit market caused by the slowdown in shadow banking. Furthermore, the CBRC just started cracking down on the quarter end deposit wars, upping the risk of a crisis in another couple of weeks. Demand for deposits is going up and it will stay elevated throughout the quarter as banks can no long wait until quarter end to add deposits.

Might it only be a rumor? Here is what the PBOC told reporters today: "if there is news, we will promptly notify." According to the big banks, they had not yet been notified of this plan.

From iFeng: 央行回应5000亿元SLF:有消息会及时通知
Great Wisdom [0.00% funding research report ] AAStocks Newswires September 17 hearing, was the central bank for 500 billion yuan SLF rumors owned five lines, the central bank to respond to the great wisdom ISD news agency said this morning, "the news will be promptly notified " . There are three rows of five rows press officer, told reporters that "the matter is not clear," the other two lines are not a formal response.

"Do not know this, my line information, please refer to the announcement dominated." Bank of China [ -0.74% funding research report ] (601988.SH/03988.HK) Head of Information Services responsible for the great wisdom news agency said.

ICBC [ 0.56% funding research report ] (601398.SH/01398.HK Head of Information Services who also told reporters that temporarily can not contact the relevant service personnel can not confirm this.

Bank of Communications [ 0.23% funding research report ] (601328.SH/03328.HK) headquarters today for great wisdom stakeholders agency responded by saying, "There has not been a specific notification to the central bank caliber messages prevail."

As of press time, the Agricultural Bank of China [ -0.80% funding research report ] (601288.SH/01288.HK), China Construction Bank [ -0.24% funding research report ] (601939.SH/00939.HK) the relevant departments have not yet given a formal response.

Another close to the central bank's authority is on the great wisdom news agency said, SLF by financial institutions initiated. Currently, not lack of liquidity, the central bank does not need to take the initiative to put substantial liquidity. If it is five lines simultaneously active application SLF, and apply the amount is 100 billion yuan, it seems unlikely. Next, the central bank is indeed possible to carry out SLF, but if the central bank to carry out SLF, but also reflect the structural orientation, will not be the flood irrigation of conduct SLF.

On the 16th evening news that the central bank last two days on five lines 500 billion yuan SLF (Standing lending facilitation), for a period of three months, each the size of each 100 billion. The message quoted broker who said the message is basically true.

Market participants believe that, SLF similar nature of the monetary base put 500 billion yuan, the approximate overall drop quasi 0.5 percent, short-term easing of monetary policy normalization.

SLF (Standing Lending Facility) refers to the standing lending convenient operation, typically used for a long period of financial institutions to meet the large demand for liquidity. SLF maximum period of three months, currently 1-3 month operating mainly; genus unconventional central bank operations, and half by the financial institutions according to their liquidity needs of the application. Operating content is not instant publicly announced before the first quarter of the monthly balance of each quarter. Interest rates based on currency regulation and control needs, integrated to determine payment methods.

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