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The following article was published in our article directory on January 17, 2011.
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The Central Bank To Raise Deposit Reserve Rate

Article Category: Business

Author Name: xia zihui

New Year insufficient month, the central bank namely opening shots tightening. Yesterday, the people's bank of China, from 2011 decision on January 20 date, upward deposit financial organ renminbi deposit reserve rate 0.5 percentage point. This is the fourth time in recent 3 months to raise deposit reserve rate, but also years first hike.

More than 3,500 billion yuan locked funds

The deposit reserve refers to financial institutions to ensure that client extraction deposit or liquidated easily-initially the need of the central bank's deposit, the central bank deposit reserve requirements of of the proportion of the total deposit is deposit reserve rate. The raise, large financial institutions after the deposit reserve rate has reached 19%, creates the historic highs, and part is to execute a difference to the deposit reserve rate of financial institution is to execute, 20% of the standard. Small and medium sized financial institutions deposit RRR hike will be as high as 15.5%.

19 percent of the deposit reserve rate means, the bank in absorbs 100 yuan deposit later, due to the central bank $19, the remaining $81 can be used for lending. Through improving the Banks' reserve-requirement ratio, the central bank release of austerity signal, known as the liquidity is one of the three greataxe macro-control.

According to the central bank, the end of the decade of previous data in China amounted to RMB deposit balance, thereby computation, 7.182 trillion the raise deposit reserve rate can be roughly locking commercial bank capital more than 3,500 billion yuan.

Analysis ChenYi are tightening liquidity

Analysts argue that current liquidity dropping two channels - credit supply and foreign exchange combines both presents the fast growth momentum. Central Banks to tighten move liquidity. By "early on early benefit" profit drive and monetary policy tightening intended effect, early reappeared credit blowout. According to media reports, the New Year in the first week of financial institutions and credit supply has risen 50 million yuan. Foreign exchange gap, gap year since the second half of foreign exchange to maintain speeding. December foreign exchange combines growth 4033 billion yuan.

China construction bank research, said senior fellow ZhaoQingMing raise deposit reserve rate is the most direct impact on the control bank lending ability that bank financing area nervous, affecting bank asset allocation, make its fluidity get tighter. For other aspects, such as stock market is little affected.

For effective management of liquidity, central bank credit management system, this reform monthly calculation and implement commercial Banks difference deposit reserve rate. Central bank governor zhou xiaochuan said before, in the next few years, financial reform to establish and perfect the inverse cycle of currency credit dynamic adjusting mechanism, the currency credit and liquidity management to the amount of adjustment and constructing macro prudence framework combine, implement difference reserve dynamic adjustment measures, rich and supplement policy tools, the guidance currency credit moderate growth.

S doubts

1 the deposit reserve rate whether have limit?

Theoretically no upper limit, it is thought that operation is unfavorable exceed 25%

Since last November, the central bank had four times since raise deposit reserve rate, commercial Banks' reserve-requirement ratio execution standard also repeatedly website highs. Deposit RRR hike space and how many?

The central university of finance and economics professor guo TianYong said in 1984, the people's bank of China has just exercise the functions of the central bank, according to deposit nature reserve requirements prescribed, savings deposit 40%, enterprise deposits 20%, rural deposit by 25%. This is because the central bank to be centrally greater funds through refinancing means such as YuQue dispensing. Mexican central bank also once stipulated over more than 30 percent of the statutory reserve fund rate. Theoretically the deposit reserve rate no cap space.

However, from the current reality of regulatory index look, RRR hike space may is relatively limited. Barclays capital says, because the CBRC for bank deposit-loan ratio requirement is not more than 75%, namely loans than deposit shall not be higher than 75%, therefore the deposit reserve rate cap 25% is reasonable, otherwise medium-sized joint venture Banks will not have enough savings to pay loans, then restrict the healthy development of the commercial Banks.

2 raise interest rates in whether lower possibility?

Recycling liquidity is consensus, to raise interest rates influence experts disagree with each other

The deposit reserve rate and interest rate hikes are respectively through the quantity and price control of two kinds of means, frequent raise deposit reserve rate at the same time is also reduce short-term interest rate hikes, the possibility of this industry experts disagree with each other.

The central university of finance and economics professor guo TianYong said, central Banks' reserve-requirement ratio again, with the intent of liquidity flexible management, prevent bank credit blowout early reappeared condition. At the same time, can avoid easy appear before the inflation expectations are going strong. But this does not rule out the possibility of the central bank raised interest rates around the Spring Festival.

The central bank's monetary policy committee XiaBin said last night, the central bank raised its reserve in the market LvYi excessive liquidity retracted. XiaBin thinks, at present the excess liquidity lies in foreign exchange combines overmuch, RRR hikes is to withdraw liquidity, does not mean that the central bank to tightening. He said the central bank raised interest rates have no choice, because of the influence of interest rate hikes on recycling liquidity require a series of policy transmission mechanism, in time have delayed effect, not as effective as raise deposit reserve rate directly and obvious.

But people's livelihood securities chief economist TengTai, says that the raise deposit reserve ratio, is likely to mean that reduces the possibility of raising interest rates before the Spring Festival. Last December the CPI highs, based on this is expected to judge, before the Spring Festival of rate in the rear.

S influence

Stock market short-term write-downs

For the central bank to raise deposit reserve rate, becomes fund said yesterday, short-term inside tighten policy will influence the listed company profit, to share price cause certain pressure. The big securities research institute LiDaXiao think, upward to the market's influence is negative, short-term or have certain concussion, but will not affect the market the upward trend.

Countries ZhangGuoJiang gold securities analysts view is more pessimistic, he said that in recent stock market turnover shrinking, liquidity tightens circumstances, central Banks issued this policy will generate large negative impact on the stock market, and the central bank may also has promulgated related tighten policy, grail may continuous overcast fall.

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