II. Standing Lending Facility (SLF) and Medium-term Lending Facility (MLF) Operations



Based on the need for monetary policy management as well as the liquidity situation in the banking system, the PBC comprehensively employed different monetary policies during the first half of 2017, including the Temporary Liquidity Facility (TLF), the MLF, and the SLF, to maintain liquidity stability in the banking system.

 

In January 2017, the PBC provided temporary liquidity support with significant cash injections through the TLF to a number of large banks in an effort to meet the intense liquidity demand ahead of the Spring Festival and to ensure liquidity stability in the banking system and the smooth functioning of the money market. As a result, the impact of substantial cash injections before the Spring Festival on liquidity stability in the banking system and on the functioning of the money market was significantly reduced.

 

SLFs were conducted to fully cover the short-term liquidity needs of locally incorporated financial institutions and to promote the steady functioning of the money market, leveraging the role of the SLF rate as the ceiling of the interest-rate corridor. In the first half of 2017, the PBC conducted a total of RMB 306.9 billion of SLF operations, with outstanding SLFs of RMB 44.6 billion at end-June. To reflect the stabilization and growing momentum of the economic fundamentals and the upward trend of interest rates in the money market, the PBC raised SLF rates twice during the first quarter, adding 20 basis points to the 7-day and 1-month SLF interest rates and bringing the overnight, 7-day, and 1-month SLF interest rates to 3.30 percent, 3.45 percent, and 3.80 percent respectively. Interest rates at the end of the second quarter were at the same level as those at the end of the first quarter.

 

MLFs were conducted as necessary on a monthly basis to promote steady economic growth and to ensure a supply of base money in consideration of the liquidity demand of financial institutions. MLF operations during the first half of 2017 reached RMB 2894.0 billion on a cumulative basis, with RMB 4224.5 billion remaining outstanding at end-June, an increase of RMB 767.2 billion from the beginning of the year. MLFs have been an important channel for the PBC to make base money injections as a means to bridge the mid-to-long-term liquidity gap in the banking system. MLF operations were conducted through an auction process, and the auction prices for 6-month and 1-year MLFs during the second quarter posted at 3.05 percent and 3.20 percent respectively.

 

III. Further Improvements in the Macro-Prudential Policy Framework

The prevention of systemic financial risks is an ongoing theme in financial work. The macro-prudential policies are mainly targeted to prevent systemic financial risks from macro, counter-cyclical, and cross-market perspectives, with a focus on addressing the shocks of pro-cyclical volatilities and cross-market risks stemming from the financial system to the macro-economy and to financial stability. Currently, the Macro-Prudential Assessment (MPA) is one of the important means to build the macro-prudential policy framework. The MPA closely links credit growth to capital adequacy and a reasonable demand for economic development, featuring the characteristics of both macro-prudential policy and monetary policy. Based on changes in the situation and the demand for adjustments and control, the PBC has been improving the MPA. During the first quarter of 2017 it officially included off-balance-sheet wealth management businesses in the scope of broad credit indicators while also conducting MPA assessments. From the perspective of implementation, the growth rate of broad credit, including that of off-balance-sheet wealth management business, has dropped from high levels, which has played a significant role in containing the rapid growth of the leverage ratio within the financial system, facilitating the healthy operations of financial institutions, and enhancing the sustainability of financial support to the real economy. At the same time, the PBC has been focusing on preparatory work to include inter-bank certificates of deposit in the scope of the MPA inter-bank debt ratio indicator and on occasions it has disclosed other relative considerations, such as during the conference on the disciplinary mechanism for interest-rate pricing, in an aim to provide an adequate transition period to ensure smooth implementation.

 


Дата добавления: 2018-02-28; просмотров: 394; Мы поможем в написании вашей работы!

Поделиться с друзьями:






Мы поможем в написании ваших работ!