in order to win the outbreak prevention and control war, financial support policies have been used as a "booster". the people's bank of china announced on february 2, for the maintenance period of epidemic prevention and control of special abundant liquidity in the banking system is reasonable and money market running smoothly, the people's bank of china on february 3, 1.2 trillion yuan will undertake public reverse repurchase operation on the capital market, to ensure sufficient liquidity supply, liquidity in the banking system as a whole than the same period last year more than 900 billion yuan. on february 1, five ministries of the people's bank of china, the ministry of finance, the banking and insurance regulatory commission, the securities regulatory commission and the safe jointly issued the "notice on further strengthening financial support for the prevention and control of the outbreak of pneumonia caused by the new coronavirus" (hereinafter referred to as the "notice"), pushing forward 30 key policies. in an interview with reporters, a delegation of npc and cppcc officials said that we should increase financial support for the prevention and control of the epidemic and the real economy by increasing the use of credit, opening up a green channel for financial services, and providing convenient and direct financing services.
industry insiders said that for the short-term impact of the outbreak may have to further take a number of measures, monetary policy on a sound basis, flexible adjustment, marginal easing.
the regulatory authorities play a combination of policies
"maintaining reasonable and sufficient liquidity" is an important part of the combination of measures taken by financial regulators to prevent and control the epidemic. on february 2nd the central bank offered reassurance ahead of the opening of trading on february 3rd.
on february 3, people's bank of china will carry out reverse repurchase 1.2 trillion yuan open market operations to put their money, the shanghai municipal people's government and professor at the china europe international business school, counselor sheng in an interview with the economic information daily, reporter said that in previous years, is a large number of reflux liquid after the spring festival period, relatively high amount of liquidity in the banking system. due to the decline in liquidity demand after the holiday, the central bank will normally suspend open market reverse repurchase operations and use the reverse repurchase maturity to withdraw liquidity naturally. after the spring festival this year, a net amount of rmb 150 billion was allocated on the initiative, mainly because of the increased market liquidity demand due to the high uncertainty factors in the special period of the epidemic. the move will allow post-holiday liquidity to remain more abundant than in previous years, with financial institutions having more money to support the economy and fight the outbreak.
sheng songcheng further pointed out that the move has positive significance in many aspects, which not only stabilized financial market expectations and boosted capital market confidence, but also helped financial institutions to further increase support for the real economy, especially small and micro enterprises, to help small and micro enterprises overcome difficulties.
the central bank's move complements a circular jointly issued by five ministries on february 1. dong ximiao, a distinguished researcher at the national laboratory of finance and development, said the release of the circular will create better conditions and provide more support for the prevention and control of financial services outbreaks, as well as strengthen coordination and guidance for financial institutions. at the critical stage of epidemic prevention and control, financial support and services should be both robust and accurate.
according to the circular, financial institutions should be guided to increase credit support for the prevention and control of the epidemic, regions, industries and enterprises affected by the epidemic, as well as social and livelihood sectors. relevant industries and enterprises with development prospects but temporary difficulties, especially small and micro enterprises, should not blindly take out loans, cut off loans or hold down loans. we should improve the efficiency of examination and approval, reduce the cost of loans, improve the arrangements for renewing loans, increase credit loans and medium - and long-term loans, and help enterprises tide over difficulties.
the bancassurance industry has taken many measures to support epidemic prevention
since january 26, the circ has repeatedly sent three documents. financial institutions have also responded positively to ensure that all aspects of the financial needs related to the outbreak are met, from donations to refined financial services. china's banking and insurance institutions and industry associations had donated 1.4 billion yuan as of january 31, according to incomplete statistics, according to the circ. insurance institutions have donated insurance insurance to frontline personnel for epidemic prevention and control, with the total amount of risk insurance exceeding one trillion yuan.
epidemic area donates fund to delimit business respect, a few bank expresses already opened green channel. everbright bank shall not charge inter-bank transfer handling fee, electronic transfer fee, postage fee, telegraph fee and other related fees for donation or remittance of special funds for epidemic prevention to the epidemic area of hubei province or other special accounts for epidemic prevention through its various business channels. citic bank active docking facility foreign trade enterprises, medicine, health and epidemic prevention departments, public welfare organizations, such as mechanism, surgical masks, protective equipment, drugs for facility customers reagents, medical equipment and raw materials and other goods emergency import payment of foreign exchange and cross-border donate proceeds opened the green channel, in accordance with the highest priority and facilitation process to handle the business, as of february 1, deal with nearly 40 cross-border business, total amount of nearly 30 million yuan.
credit support aspect, bohai sea bank is right hubei area stock credit business undertakes check one by one, to the enterprise that epidemic situation affects normal operation, encounter temporary difficulty, pass to extend period, do not repay capital to renew loan, credit reorganizes, reduce overdue interest to wait for a way to give full support. several banks, including agricultural bank of china, china construction bank and bank of communications, have said they will cut 0.5 percentage points from the current interest rate for loans to small and micro businesses, self-employed businesses and private business owners in hubei province.
as the "stabilizer" of social development, the insurance industry gives full play to the insurance protection function in this war. according to incomplete statistics, as of february 2, a total of more than 80 insurance companies through different channels voice, take a number of measures to actively deal with the outbreak. more than 60 life insurance companies, including picc life insurance company and guoshou life insurance company, have opened a green channel for the settlement of epidemic claims, started the pre-compensation mechanism for special needs cases, and lifted the exemption limit for "specific infectious diseases". more than 30 life insurance companies, including pacific life, metlife, kunlun health and love life, have cancelled the restrictions on designated hospitals, observation periods and deductiables to varying degrees.
prudent monetary policy can be moderately relaxed at the margin
experts say the impact of the outbreak on china's financial markets is short-term and temporary. however, the relevant short-term impact should not be underestimated, and further measures should be taken to prepare for the possible impact of the epidemic on the economy.
mr sheng said the challenges facing the recovery were likely to be more severe than during the sars outbreak in 2003. therefore, while doing our best to deal with the epidemic, we should also attach great importance to the weak links in the economy, take effective measures to help enterprises, especially small and medium-sized enterprises, tide over difficulties, stabilize employment and ensure people's livelihood. as long as policies and measures are in place, the impact of this outbreak should be short-term and manageable.
mr sheng said a prudent monetary policy could be moderately relaxed at the margin. the focus of monetary policy should be on effectively easing the liquidity pressure brought by the epidemic and trying to reduce the operating costs of enterprises affected by the epidemic. according to relevant authorities, if enterprises are exempted from interest expenses incurred during the extended three-day holiday, the financial cost of enterprises could be reduced by about 45 billion yuan. the people's bank of china may, through macro-prudential assessment, encourage development-oriented financial institutions and policy banks to increase financial support to the medical and health sectors and areas seriously affected by the epidemic through such monetary policy tools as rediscount, refinancing and supplementary mortgage loans by the central bank.
dong ximiao also said that china's monetary policy should be flexible, appropriate, targeted and accurate in response to changes in the epidemic on the basis of maintaining stability. while providing support for the prevention and control of the epidemic, financial institutions should pay more attention to preventing financial risks.
source: china financial information net