Liu Yuhui: Lowering The 150 Basic Points To Smooth The Liquidity Gap

Liu Yuhui, a professor of the Chinese Academy of Social Sciences, said in an exclusive interview on 6, that foreign exchange holdings are worrying this year, and the pressure on interbank liquidity gap is large. In theory, the 150 basis points will be reduced.

Of course, if the central bank mostly uses some asset end tools, the rate of reduction may not be so large.

In the future, the clearance space will be further opened unless there is obvious outflow of capital.

Liu Yuhui said that the central bank's reduction in February 5th is expected, because the liquidity gap between banks is estimated one year.

At the specific time of implementation, the central bank should take account of the balance of payments and some seasonal factors, for example, from 2 to March, it is a time window with larger probability.

China's latest balance of payments shows that the pressure of capital outflow is greater.

The capital account and the financial account had a deficit of $96 billion in the fourth quarter of last year.

The combination of the downward pressure on domestic economy and the decline in the attractiveness of RMB assets and the strength of the US dollar may lead to a liquidity outflow of the US dollar.

This state of affairs is expected to continue. Since 1 to February, the RMB has weakened against the US dollar.

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As well as the seasonal factors of the Spring Festival, the pressure of interbank liquidity continues to increase, the yield curve is very flat, and even the short end interest rate is upside down.

Theoretically, it is a hedging tool and can not be equated with a strong demand stimulus.

In theory, he said, the identity of the national accounts of an economy is balanced.

That is to say, the current account and capital / financial account must be equal unless the Central Bank of China passes the establishment.

Intervening in the foreign exchange market.

China has been a "double surplus" country in the past 20 years.

Because our country has been collecting foreign exchange and controlling the rhythm of nominal exchange rate appreciation, we have accumulated foreign exchange reserves, and then used excess reserves to lock in excess liquidity.

In the ten years before 2012, the nominal exchange rate of the RMB did not keep up with the appreciation of the real exchange rate, so as a kind of compensation, there were more serious inflation and asset bubbles. Now it has gone to the opposite process. The nominal exchange rate can not keep up with the pressure of the real exchange rate depreciation.

He believes that if all factors make it difficult for the nominal exchange rate to get enough flexibility in a considerable period of time, it will become normal to reduce deflation pressure by reducing capital outflow and foreign exchange reserves.

This should not be simply regarded as currency drain.

A series of remarks made by the central bank on maintaining a "prudent" monetary policy also released signals that monetary policy would not be loosened significantly.