Chinese monetary policy can be more effective

"China Economic Weekly" chief commentator Niu Wenxin

On May 25, the State Council held a telephone conference on the national market to stabilize the economic market. Li Keqiang, Premier of the State Council, pointed out that the key node that is currently determining the economic trend of the year must grab the time window and strive to promote the economy to return to normal track.

Two days ago, on May 23, the central bank held two meetings, once, with the China Banking Regulatory Commission convened 24 major financial institutions to analyze the current Chinese currency credit situation, and requested that "the major financial institutions must take the main responsibility and mobilize, mobilize the mobilization, mobilize In all aspects of the industry, efficient docking and effective credit needs, and strengthening policy transmission "; the other time is the central bank's internal meeting held on the day, proposing" the heavy responsibility of supporting financial institutions to support the macroeconomic market. " It can be seen that the Chinese financial management authorities have a stronger sense of urgency, especially the central bank's "active act of active" is more powerful and timely.

However, the central bank's "active acting" needs to find "grasping points". This "grabbing point" should not be just some temporary measures, such as increasing the strength of re -loan or short -term financial support, and it should be "emergency" and financial supply -side structural reforms. , Tu Zhiyuan, for sustainable and more effective support for the high -quality development of China's economy.

There are at least two reasons: First, the impact of the epidemic may be short -term, but the short -term impact may not be recovered in the short term. After all, the money and resources invested by enterprises during the epidemic can only allow the enterprise to survive without generating economic benefits. These investment depends on the future production benefits to "gradually fill". support. The second is that in addition to the epidemic, it is more likely to see that the external pressure facing China's economic development is more likely. This requires China's long -term, sustainable, and large -scale efforts to build a large -scale recycling in China. Supporting efforts cannot be said to be withdrawn, but must be matched with domestic economic development requirements.

Financial support is often accompanied by the upward pressure of leverage. Therefore, how to support the economy without the systemic risk of excessive debt leverage? This is a very important issue, a big test for China's financial wisdom.

Finance must return basic common sense

Financial people know that the bank has a "mysterious porridge pot" in the hands of the bank, which can turn deposits into loans, loans into deposits, and create M2 through such a cycle. Economists often use a commonly conscious formula "m2 = basic currency × currency multiplication" to explain problems. This formula tells us: M2 originated from the basic currency invested by the central bank, and then the bank issued a loan to the enterprise with the basic currency. Depression is engaged in loans. From the perspective of the banking industry, this is the cycle of deposit changes to loans, loans and deposits.

The "deposit loan cycle" such as a bank eventually enlarged the basic currency many times, and this multiple is the currency multiplication. Therefore, the so -called "mysterious porridge pot" in the bank's hand actually is actually the process of the bank's increase in the multiplier of the currency to increase the supply of M2.

The question is: Can M2 grow, can the central bank restrict the supply of basic currencies in the long run and simply rely on the "mysterious porridge pot" to continuously "mix water" to achieve it? The theory of new liberal currency believes: it must be. Because the economy needs only the market to know and the government does not know, the currency issuance needs to be calculated (that is, commercial financial institutions are realized through credit creation), not the government said. The theory of new liberal currency also believes that if the government is allowed to calculate, the government will issue a large number of government bonds for political achievements and overdraft currency, which will cause malignant inflation.

Is this really like this? It turns out that the financial crisis is often the result of "mysterious porridge pots". The founder of modern currency theory Rander Lei believes that it is continuously expanded to allow "mysterious porridge pots" to increase currency (M2) in circulation. This is not only the source of debt leverage, but also the United States and even the world in 2008 The source of the financial crisis. Therefore, the theory of modern currency claims: The government wants to recover the right to the currency. If it is allowed to create currencies for commercial financial institutions, it is actually equivalent to the sideline of national currency sovereignty. It is a wrong approach.

Note: The sovereign currency of modern currency theory is the basic currency, a currency based on national credit, the "rice" in the "mysterious porridge pot", and the currency multiplication is the "mysterious porridge pot" water".

In China, Economist Xiang Songyu also demonstrated in the book "New Capital": Inflation often originated from commercial credit expansion -currency multiplication continues to rise to promote M2 growth, not the result of basic currency issuance. According to common sense: Why do we not believe in the government, and believe that the government will force the currency to be over issuance due to political achievements and expanding fiscal deficit? Instead, it should trust commercial financial institutions and think that they will not expand their credit without speculative needs? In fact, the transfer of monetary issuance rights to commercial financial institutions is exactly the typical characteristics of financial capitalism.

If you deviate from the sovereignty of the currency state and transfer the right to currency issuance to commercial financial institutions, can the economy sustainable and healthy development? It turns out that in recent years, China's M2 growth is exactly the process of "not increasing the basic currency, but relying on currency multiplication to continue to rise". Is this where the "running" in the past financial development process? Let us return to common sense! GDP growth must have a matching M2 growth, and M2 growth should also have a basic currency growth that matches it. This is common sense. In general: To make the porridge in the "Mysterious Porridge Pot" be better and good, it can make more and higher adults eat and understand, we must add rice to the porridge pot at the same time. Gami.

New liberal currency theory defects

In order to explain the issue, everyone should pay attention to the logic line of three common sense.

The first logic line: In currency science, the currency multiplication is also called "currency circulation speed", which refers to the transaction turnover speed of "from currency to commodity to currency". Therefore, the higher the currency multiplication, the higher the currency circulation speed; the higher the currency circulation speed, the shorter the "time cycle" of its relative currency circulation; The shorter the period of financial commodities composed of various loans. This is the so -called short -term financial. Further clearly, the way to make financial short -term is caused by not giving basic currencies and relying on currency multiplication. The real financial meaning should be: banks must only be continuously reduced credit periods and accelerate credit turnover to meet national economic growth to meet national economic growth Requirements for the increase in the number of currency loans.

This financial method may be suitable for the economic structure of services such as the United States, because whether it is business or finance, it is fast, "from currency to commodity (financial goods) to currency", but is it suitable for manufacturing China and real economy -based China? We know that the production process is the process of "from currency to raw materials, then production and processing, to goods sales, and then currency." This process is far greater than the simple process of "from currency to commodity to currency". Therefore, the monetary finance method before 2008 is not suitable for China. The structural reform of China's financial supply side should move towards the long -term financial direction without being able to move in the direction of financial short -term.

Article 2 Logic line: The shorter the bank deposit period, the shorter the bank's credit period, the more and more serious the "deposit and loan period, investment and financing period of investment and financing" will appear in banks and enterprises. Lobricity risk is actually the core of financial risks; in order to reduce liquidity risks, banks and enterprises must "borrow short -term funds", so that the total social debt is far more than "valid debt demand". In other words, the total debt of the whole society is huge, but the number of commercial production and industrial services is small. What are the debt difference? Short in the financial circle. Why is it empty? Because all enterprises and financial institutions must rely on these short -term debt to maintain liquidity safety. Why can't the finance turn out? The reason may be here.

Further logic is: the more serious the debt period is mismatch, the greater the scale of short -term loan demand. The time limit mismatch reaches a certain margin, which may lead to the increase in short -term debt demand in the whole society. Financial risk (liquidity risk) accumulate. Especially under the existing system, long -term loans are easy to tilt into national projects, state -owned enterprises (because of small risks, small responsibilities, and easy identification), while private enterprises have lack of sufficient support, so that endogenous economic growth momentum - Folk investment has continued to weaken.

Article 3 Logic lines: The short -term financial line makes China ’s financial surface a lot of currency and great liquidity, but what can really meet the needs of the real economic needs and can be used as a long -term capital shortage of capital use. Therefore, from the perspective of the real economy and manufacturing that must be relying on long -term funds, the short -term finance can be said to be "the name of the monetary policy is tight." In the long run, China's economic growth may be suppressed.

In addition, we should also see that monetary issuance rights are awarded commercial financial institutions, which is the essential characteristics of financial capitalist society. The right to issuance of currency is the core power of finance. Whoever gets this power obtains the "coinage tax" income. The financial capital is precisely because of this power that occupies an advantageous position in the re -distribution of wealth, so finance will "get rid of reality" and do not serve wealth for wealth.

What should China do?

At present, it is no longer on the way to continue to "not give the basic currency but only increase the currency multiplier to stimulate M2", which can no longer go. Because debt leverage and liquidity risks have strongly restricted China's economic growth momentum. Isn't it? In recent years, China has frequently needed fiscal efforts to support the economic growth rate. However, when the economy has just improved, the central bank immediately returns to the road of leverage, and the result of leverage is: the downward pressure on the economy has increased. Should I ask a few more about why?

Where is China's financial problem? First, China's economy is getting larger, and it will inevitably require finance to have "greater porridge pots and more porridge"; second, to make this pot of porridge, you must add rice and water at the same time. Third, the right to issue currency must be attracted to the country, so as to effectively force financial return to the road of serving the real economy, and China has the financial foundation to achieve a common prosperity.

In order to achieve high -quality development, the direction of China's financial supply -side structural reform should be: long -term capital finance, supplemented by short -term monetary finance; supporting equity capital that supports innovation, and debt capital that supports traditional industries.

To this end, combined with the current requirements of stable economy on finance, we can achieve the goal by implementing the financial supply -side structural reform as soon as possible. The core is that the central bank is invited to "anchor" for the RMB to inject long -term basic currencies into the market by acquiring a large number of government bonds (especially local government bonds), and guide commercial banks to release more long -term loans. Short -term borrowing of liquidity safe and excessive amount. According to the theory of "Mysterious Porridge Pot", it is actually "add rice precipitation" to improve the quality of porridge; according to the theory of currency, in fact, it is actually increased the basic currency and reduce the number of currency multiplications under the premise of maintaining the moderate growth of M2.

First, the release of long -term basic currency is the foundation for building long -term finance, and long -term finance will inevitably save a lot of short -term borrowing funds that maintain liquidity safety, thereby greatly reducing the debt leverage of the whole society and greatly improving China's national financial security. Keep the bottom line that does not occur without systemic financial risks.

Second, long -term finance is not only an objective requirement that the epidemic affects long -term, but also the objective requirement of the real economy and manufacturing -China's economic characteristics, or China to crack local government debt -the objective of this "gray rhino" risk is objective Requirements are the objective requirements of the central government stimulated the enthusiasm and initiative of the local government to maintain the long -term stability of China's economy.

Third, the return to the origin, the net savings (deposit -loan) of residents are the fundamental source of bank credit. From the perspective of the situation in recent years, with the continuous growth of residential credit consumption and investment, the scale of net savings in the banks in banks has continuously reduced compared with China's total economic and bank industry assets. Insufficient loan resources, especially long -term deposit resources, a serious shortage. This gap must be supplemented, otherwise the bank's credit growth capacity will be restricted, and even the pressure of negative growth will occur. What should I do? Except for central banks to provide more long -term basic currencies, there is no other way.

(This article published in "China Economic Weekly", No. 11, 2022)

The cover of the 11th issue of "China Economic Weekly" in 2022

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