How to maintain a stable and neutral monetary policy How to break the financing problem of small and micro enterprises?

Abstract On April 23, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work, which proposed to reduce the financing costs of enterprises. The State Council executive meeting held on April 25th proposed that the bank's inclusive financial services will be subject to regulatory review to ensure that this year...

On April 23, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work, which proposed to reduce the financing costs of enterprises.

The State Council executive meeting held on April 25 proposed that the bank's inclusive financial services will be subject to regulatory assessment to ensure that the cost of financing the real economy will fall this year. The meeting also pointed out that strive to reduce the financing costs of small and micro enterprises by the end of the third quarter.

The central bank also gave the market a "Ganlin" to solve problems for enterprises.

On April 25, the People's Bank of China implemented a 1 percentage point reduction in the medium term loan facility (MLF), with a net release of nearly 400 billion yuan. The RRR cut was announced on April 18th, which surprised the market.

According to the central bank, one purpose of the RRR reduction is to address the problem of small and micro enterprises still facing difficulties in financing and financing, increase support for small and micro enterprises, and release incremental funds. Specifically: First, the repayment of MLF with the funds obtained by the RRR reduction reduces the bank capital cost (Editor's note: the one-year MLF needs to pay 3% interest rate), which is conducive to reducing the financing cost of enterprises. The second is to release 400 billion yuan of incremental funds, increasing the low-cost funding sources for small and micro enterprise loans. The central bank requires relevant financial institutions to mainly use new funds for small and micro enterprise loans, and appropriately reduce the financing costs of small and micro enterprises. These requirements will also be included in the macro-prudential assessment (MPA) assessment.

Ding Shuang, chief economist of Standard Chartered Bank, said in an interview with the news that from the process of currency creation, the RRR reduction is better than MLF and reverse repurchase, because the current currency creation is a structural problem, not seasonal. The shortage, each time using reverse repo and MLF, not only high cost, short-term window is also difficult to solve a long-term structural problem.

The central bank is also trying to guide the market. On the day of the announcement and implementation, the stable neutral monetary policy orientation remained unchanged.

The person in charge of the asset management department of a joint-stock bank believes that this downgrade will include the main force of the bank, and replace the one-year MLF with long-term tools. The central bank will give the initiative to the market; at the same time, replace the MLF with the RRR. Financial institutions have a stronger ability to withstand risks, and banks have also achieved low-cost liquidity. Now, financial institutions such as Sannong, Xiaowei, and Inclusive Finance need long-term low-cost funds, and banks still have to bear Certain risk losses and RRR cuts will undoubtedly provide strong support for this.

At the State Council executive meeting held on March 28, it was decided to set up a national financing guarantee fund. The first phase of fundraising was not less than 60 billion yuan, aiming to promote the financing problems of small and micro enterprises and “agriculture, rural areas and farmers”. At the meeting, Premier Li Keqiang mentioned the reduction of financing costs for small and micro enterprises six times. He said: "I am particularly concerned about one thing this year, that is, to solve the problem of financing difficulties and financing for small and micro enterprises. The financial sector should innovate the mechanism model and do a good job of policy implementation. This year, we must ensure that the financing costs of small and micro enterprises are reduced!"

At the central level, the multi-pronged approach and heavy punching, the financing of small and micro enterprises, and the financing problem can be solved quickly and effectively?

For the move to replace the MLF, the key is whether the liquidity released by the RRR can reach the entity. In the recent asset securitization market, real estate-related products are hot, and those with solid-selling business say that it is still difficult to reach the company.

A small business person from a rural commercial bank revealed to the news that there is no effect at all. "The problem is that small and micro enterprises have to buy a house when they get a loan. After all, it is still a matter of investing in real estate, and Xiaowei is not a fool."

Regulators have stepped up their efforts to punish financial institutions in 2017. There are countermeasures under the policy. The above-mentioned people said that as the compliance risk climbs, some bank employees have started the “intermediary” work to avoid risks, so as to avoid being responsible for the business with potential risks, so the market is really small. There are not many banks for micro-business.

It is worth noting that as a profit-and-debt swap to reduce leverage and reduce capital costs, the new asset regulation issued on April 27 encourages it. Compared with the previous draft of the Exposure Draft, the official draft of the new asset management regulations clearly stated that it encourages the full use of private equity products to support market-oriented and rule-of-law debt-for-equity swaps. This may help to alleviate the current difficult problem of debt-to-equity swaps due to the difficulty of funding sources, and become a way to reduce corporate financing costs.

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