2014-01-20

PBOC Warns on Loan Growth

Weekend press: PBOC issues warning as loans soar
The central bank warned in a statement after a meeting on money and credit conditions that commercial banks were still keen to expand loans, which have grown rapidly this month.

"Demand for cash will rise significantly as the Spring Festival is approaching," it said on its website. "Monetary and credit departments will issue timely risk alerts and guide financial institutions to strengthen liquidity, asset and liability management and reasonably set the pace on lending to prevent assets from expanding too quickly."

The mainland's money rates jumped this week as liquidity dried up ahead of the Spring Festival holiday, with traders watching to see if the central bank would maintain its passive stance and allow another cash crunch to unfold.

Analysts believe the central bank is likely to make measured use of policy tools, such as short-term liquidity operations, to help lenders weather sporadic cash strains this year.

Chinese coverage: Bank of fine solution "robust" landing warning in January excessive credit growth
2014, the central bank set the tone, "continue to implement prudent monetary policy" prudent policy implications of the word Why?

In fact, monetary policy "prudent" reference has been for many years, but in different years, different people, for robust interpretation of the word is not the same, or even different. January 17, 2014 the Bank held a working meeting of monetary credit, at this meeting, was finally able to see the 2014 "prudent monetary policy," the true capacity.

The above conference on money and credit, the central bank once again emphasized in 2014 will continue to implement a prudent monetary policy. Unlike in the past, but this time the central bank explained from two aspects of how landing prudent monetary policy in 2014. The central bank said the Central Economic Work Conference that do economic work in 2014, the core is to adhere to the "progress while maintaining stability, reform and innovation." Continue to implement prudent monetary policy should be conducted around this core.

Earlier, central bank data showed, in 2013 total new RMB loans 8.89 trillion yuan, the scale of financing social 17290000000000. Financing scale social record, a record size of loans in RMB is the second highest on record.

Bank Financial Research Center expects 2014 full-year lending rate will slow further than the 2013, new loans 9800000000000-10000000000000; financing scale community will 19000000000000-19600000000000, raising the stock up by speed will slow down.

A joint-stock bank sources said, in December 2013 the credit worse than expected, but after entering in 2014, the bank invested early benefit of early inertia impulse remains, for now, put the size of bank credit is still relatively fast.

Before the 12 days in January, the four lines new loans has reached 320 billion, higher than last year's 270 billion yuan. At this rate, in January of this year, new loans of financial institutions is expected to more than 1 trillion yuan. Historical data show that in January 2013 1.07 trillion yuan in new loans.

Bank Financial Research Center, said Xu Bo, by the beginning of the seasonal rise in loan demand, banks have increased lending and other factors affect the expected January new credit facility and the community has increased significantly.

"Since January, the supply of liquidity in the banking system more comfortably and pursue commercial banks 'early delivery, early gains', etc. under the influence of rapid loan growth." Central bank also off in rapid credit growth remain vigilant. In addition, the central bank also said that the Spring Festival approaching, the cash requirements will increase significantly.

"Historically, whenever the Spring Festival approaching, cross-section of the cash demand will begin to rise gradually, beginning repo rate will gradually rise from mid-January due to end this year on a peak theoretically take now fully reflected in the January . " Minsheng Bank financial market researcher Ma Yue said that residents take now will reduce the excess reserve ratio for banks, which will form a more significant impact on liquidity.

Can also be seen from the recent trend among Shanghai Interbank Offered Rate (Shibor), the Spring Festival approaching funding level of tension. On Friday of each term Shibor rates rose across the board, which breeds week Shibor rose 52 basis points to 4.776 percent of the high level.

In the meeting, said the central bank, monetary and credit risk departments to timely tips to guide financial institutions to strengthen liquidity and asset-liability management, reasonable arrangements for the granting of loans to prevent excessive expansion of assets.

In fact, in addition to external credit conditions in January for the annual monetary and credit, the central bank once again stressed the need to implement a prudent monetary policy. With the previous difference is that the central bank explained in two ways foothold prudent monetary policy.

First, insist on maintaining stability. "Stability" mainly money and credit work for "total stability", the focus is to create a stable monetary and financial environment for economic structure adjustment and transformation and upgrading; "into" shows as "optimization", by improving and optimizing the financing structure and credit structure, and enhance the ability of financial service of the real economy.

Second, persist in reform and innovation. With the spirit of reform, ideas, ways to improve monetary policy, blending into the reform in the regulation to improve financial efficiency of resource allocation.

For this year's work, the central bank will still be financial reform in a very prominent position, "to further promote the interest rate market and further improve the RMB exchange rate formation mechanism of the market." In fact, in 2014, is generally considered to be the first year of a new round of China's financial reform. In this year, the deposit insurance system is likely to fall, the interest rate market, the exchange rate market, as well as capital projects are considered to be open to march forward.

It is worth noting that the central bank on Friday also said that monetary policy will be based on the need for innovative operational tools to enhance the relevance of macro-control, flexibility and effectiveness.

Last time, the central bank monetary policy operations launched innovative tool is early in 2013. At that time the central bank introduced two new monetary policy tools, namely short-term liquidity adjustment tool (SLO) and equipment loan facilities (SLF). SLO, SLF's creation greatly expansion of central bank monetary policy toolbox, to improve the central bank initiative and flexibility, but also make the central bank's monetary policy intentions more conduction. In June 2013, December next two tight liquidity situation, the central bank to inject huge amounts of liquidity of some banks by SLO, on a stable market expectations played a crucial role. Up to now, the central bank open market operations toolbox, already has a central bank bills, repo, reverse repo, SLO, SLF and other policy instruments.

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