After years of practice and exploration, the central bank finally institutionalized the macro-prudential policy and made it public to enhance policy transparency.
On December 31, the peopleBankIssued the “Macroprudential Policy Guidelines (Trial)” (hereinafter referred to as the “Guidelines”), which defines the concepts related to macroprudential policies, expounds the main content of the macroprudential policy framework, and puts forward the support and guarantees required for the implementation of macroprudential policies. Policy coordination requirements.
The highlights of the “Guidelines” are mainly reflected in the following three aspects:
The first is to clarify the concepts related to macro-prudential policies. Defines the relevant definitions of the macro-prudential policy framework, systemic financial risks, and the macro-prudential management working mechanism.
The second is to elaborate on the specific content of the macro-prudential policy framework. Including: clarify the macro-prudential policy objectives, namely to prevent systemic financial risks, especially to prevent the pro-cyclical accumulation of systemic financial risks and cross-institutional, cross-industry, cross-market and cross-border contagion, improve the resilience and robustness of the financial system, and reduce financial The possibility and destructiveness of the crisis will promote the overall health and stability of the financial system; outline the types of systemic financial risks that macroprudential policies mainly respond to and the monitoring and evaluation mechanism; divide the main tools that can be included in macroprudential policies, and develop tools The process of activation, calibration and adjustment; the governance mechanism of the macro-prudential policy has been clarified.
The third is to put forward the support and guarantee required for the implementation of macro-prudential policies, explain the macro-prudential policies and other policies, especially those related tocurrencyCoordination of policies and micro-prudential supervision.
The relevant person in charge of the central bank stated that the “Guidelines” clarify the elements of establishing and improving my country’s macro-prudential policy framework, expounding the thinking, principles and framework of my country’s macro-prudential management, which is conducive to enhancing market entities’ awareness and understanding of macro-prudential policies. In terms of systemic risk prevention, we shall build consensus, strengthen overall planning and coordination, and further consolidate the foundation for prevention and resolution of systemic financial risks.
Key point 1: Improve policy transparency
The Nineteenth National Congress of the Communist Party of China put forward the major decision-making and deployment of “sounding the dual-pillar control framework of monetary policy and macro-prudential policy”. (MPA), to the establishment of a special macroprudential agency, and then to the implementation of supervision of financial holding companies, the importance of the domestic systemBankThe list is officially released, additional regulatory regulations are implemented, and the global system importance is formulated and implementedBankThe total loss absorptive capacity management measures are constantly improving the macro-prudential policy framework.
However, compared with the central bank’s continuous practice and exploration, the outside world still knows little about macro-prudential policies. The evaluation system, quantitative targets, and toolboxes of the central bank’s macro-prudential policies are like a “black box” to the outside world. As the top-level design document for macro-prudential policies, the Guidelines are conducive to enhancing policy transparency by building a basic framework of macro-prudential policies and helping to enhance market players’ awareness and understanding of macro-prudential policies.
Former Deputy Governor of the Central Bank, InternationalMonetary FundLi Bo, vice president of the International Organization (IMF), once said that compared with the already very mature monetary policy framework, the birth of macro-prudential policies is still relatively short, and it is still in its “childhood” or “adolescent period”. Great room for growth.
“The concept and practice of macroprudential policies are a new field. The understanding of macroprudential policies from all walks of life continues to deepen, and the practices of major economies are still evolving. Effectively play the important role of macroprudential policies in preventing systemic financial risks. It is necessary to do a good job in the top-level design of macro-prudential policies, build the basic framework and enhance transparency, to lay a solid foundation for specific macro-prudential management work, and to promote the understanding, implementation, and operation of macro-prudential policies.” The relevant person in charge of the central bank said.
Key point 2: Define systemic financial risks in this way
The so-called macro-prudential policy, as defined in the Guidelines, is actually applicable to institutions established in accordance with the law and approved by the financial management department of the State Council to engage in financial business or provide financial services, as well as financial activities and financial activities that may accumulate and infect systemic financial risks. Market, financial infrastructure, etc.
It can be seen from the above definition that the goal of implementing macro-prudential policies is to prevent systemic financial risks. The targets of implementing macro-prudential policies include not only licensed financial institutions, but also financial activities that may accumulate and infect systemic financial risks, etc., will be included in the scope of policy supervision.
As a programmatic document, the Guidelines clarify the concepts related to macroprudential policies. It is particularly worth noting that in recent years, “preventing and dissolving systemic financial risks” has frequently appeared in various policy documents of financial regulatory authorities, but the official has not given a formal and complete definition of what constitutes a systemic financial risk. The “Guidelines” explained in detail the definition of systemic financial risks and clarified the monitoring priorities of systemic financial risks.
According to the Guidelines, systemic financial risks refer to financial risks that may have a major impact on the normal development of financial services, and then cause a huge negative impact on the real economy. Systemic financial risks mainly come from two dimensions: time and structure:
(1) From the perspective of time, systemic financial risks are generally triggered by the consistent behavior of financial activities and accumulated over time. They are mainly manifested as excessive expansion or contraction of financial leverage, which leads to procyclical self-reinforcement and self-amplification of risks.
(2) From a structural perspective, systemic financial risks are generally triggered by the instability of specific institutions or markets, and spread through the interrelationships between financial institutions, financial markets, and financial infrastructure. They are manifested as risks across institutions, departments, and Cross-market and cross-border infection.
The Guidelines also clarify that the monitoring focus of systemic financial risks includes the macro leverage ratio, the debt level and repayment ability of the government, enterprises, and household sectors, and financial institutions, financial markets, and financial institutions that have systemic impact and strong risk spillovers Products and financial infrastructure, etc.
Key point 3: Two dimensions and 9 categories are divided into macro-prudential tools
In the central bank’s “dual-pillar” framework, the monetary policy control framework has been very clear, and the policy toolbox including aggregate monetary policy tools and structural monetary policy tools has been highly transparent. In contrast, the outside world did not have a comprehensive understanding of the macro-prudential policy control tools before. The “Guidelines” divided the main tools that can be included in the macro-prudential policy, and formulated the tool activation, calibration and adjustment procedures.
Specifically, the “Guidelines” clarified for the first time that, for different types of systemic financial risks, macroprudential policy tools can be divided according to two attributes: time dimension and structural dimension, and some tools have both attributes. Tools in the time dimension are used for counter-cyclical adjustments to smooth the procyclical fluctuations of the financial system; tools in the structural dimension are used to prevent systemic financial risks by improving the regulatory requirements for key nodes in the financial system. infect.
(1) The tools of the time dimension mainly include:
1. Capital management tools, mainly through adjusting the additional regulatory requirements imposed on the capital level of financial institutions, asset risk weights in specific sectors, etc., to inhibit the accumulation of procyclical financial risks caused by excessive expansion or contraction of assets, and excessive concentration of asset structures.
2. Liquidity management tools, mainly by adjusting the additional regulatory requirements imposed on financial institutions and financial products’ liquidity levels, asset realizability, and sources of liabilities, restricting excessive reliance on wholesale financing and serious mismatches in currency and maturity, etc., to enhance finance The resilience and robustness of the system in response to liquidity shocks.
3. Asset-liability management tools, mainly by adjusting the composition and growth rate of assets and liabilities of financial institutions, exert an influence on the debt level and structure of market entities, and prevent excessive expansion or contraction of assets in the financial system, concentrated exposure of risk exposures, and debts of market entities Systemic financial risks caused by deviations from reasonable levels.
4. Financial market trading behavior tools, mainly by adjusting the additional regulatory requirements imposed on financial institutions and financial product trading activities, such as margin ratios, financing leverage levels, etc., to prevent systemic financial risks that may be triggered by large fluctuations in financial market prices.
5. Cross-border capital flow management tools mainly impose restrictions on the factors that affect the procyclical fluctuations of cross-border capital flows to prevent systemic financial risks that may be caused by the “large inflows and large outflows” of cross-border capital.
(2) The tools of the structural dimension mainly include:
1. Additional regulatory requirements for specific institutions, through additional capital, leverage, and liquidity requirements for systemically important financial institutions, and consolidation, capital, concentration, and related transaction requirements for financial holding companies, to enhance the robustness of related institutions. Reduce the contagion effect caused by the occurrence of the risk.
2. Financial infrastructure management tools mainly strengthen the stability of financial infrastructure by strengthening relevant operational and regulatory requirements.
3. Cross-market financial product management tools, mainly by strengthening the supervision and management of cross-market financial products, prevent systemic financial risks from cross-institution, cross-market, cross-sectoral and cross-border contagion.
4. Risk management and other management tools to block risk contagion, such as recovery and resolution plans, mainly through strengthening financial institutions and financial infrastructure risk management arrangements, requiring relevant institutions to formulate plans in advance, and restore the ability to continue operations or realize them according to the plan when major risks occur Orderly disposal to ensure uninterrupted key business and services, avoid causing systemic financial risks or reduce the impact of risks after they occur.
It can be seen that many of the aforementioned macro-prudential policy tools coincide with the existing micro-regulatory requirements for financial institutions, but there are still differences between the two in terms of positioning and specific requirements.
“Macroprudential policies will use some tools similar to microprudential supervision, such as requirements for capital, liquidity, leverage, etc., but the two types of tools have different perspectives, problems and control methods, and they can complement each other instead of Substitution. Macro-prudential policy tools are used to prevent systemic financial risks, mainly to put additional requirements on top of the existing micro-prudential regulatory requirements to improve the financial system’s ability to respond to procyclical fluctuations and prevent risk contagion.” The “Guidelines” stated.
In addition, the use of the above tools generally includes three links: activation, calibration, and adjustment. The “Guidelines” revealed that the relevant use procedures are formulated by the lead department of macro-prudential management in conjunction with relevant departments. The leading department of macro-prudential management, in conjunction with relevant departments, dynamically assesses the situation of systemic financial risks, and adjusts the specific values of macro-prudential policy tools in a timely manner based on the assessment results and combined with supervisory judgments.
Point 4: Strengthen policy coordination in three areas
The effective implementation of macro-prudential policies requires clear and clear policy objectives, especially quantifiable objectives, and a reasonable definition of the control tools that can be used. It is also inseparable from currencyCreditCoordination of policies, financial regulatory policies, fiscal policies, and industrial policies.
“Guidelines” put forward,On the one hand, it is necessary to strengthen the coordination and cooperation of macro-prudential policies and monetary policies.Including strengthening economic situation analysis and financial risk monitoring of information communication and exchanges; consideration of monetary policy orientation in the process of macro-prudential policy formulation, fully soliciting the opinions of monetary policy formulation departments, and assessing possible spillover effects and superimposed effects of the introduction of policies.
On the other hand, strengthen the coordination of macro-prudential policies and micro-prudential supervision,Including the comprehensive consideration of the micro-prudential regulatory environment in the process of macro-prudential policy formulation, fully soliciting the opinions of micro-regulatory authorities, assessing possible spillover effects and superimposed effects of the introduction of policies, and jointly formulating macro-prudential policies with micro-regulatory authorities when it involves areas under the jurisdiction of micro-regulatory authorities Management requirements, etc.
In addition, strengthen the coordination and cooperation between macro-prudential policies and national development plans, fiscal policies, industrial policies, and credit policies to improve the ability of financial services to serve the real economy.
The international exploration of macro-prudential supervision has only been more than ten years, and my country is even more “young.” As Li Bo once said, compared with the already very mature monetary policy framework, the birth of macro-prudential policies is relatively short, and there is still much room for growth. In the future, it is necessary to strengthen the coordination and cooperation of the “dual-pillar” control framework, continue to promote the shift of the monetary policy control framework from quantitative control to price control; give full play to the role of macro-prudential policy structural targeted control, and target real estate finance , Cross-border capital flows, bond market and other potential risks in specific areas, and timely macro-prudential measures shall be adopted. Further improve the macro-prudential policy framework, study more clearly quantifiable macro-prudential policy goals, including final and intermediate goals, and clarify the top-level structure and the division of powers and responsibilities. Further improve the financial regulatory framework, further coordinate macroeconomic and regulatory policies, and at the same time strengthen prudential supervision and behavioral supervision, and implement the requirements of functional supervision and target supervision.
The central bank stated that in the next step, the People’s Bank of China will earnestly perform its leading responsibilities in macro-prudential management, continuously improve the macro-prudential policy framework, strengthen systemic financial risk monitoring, evaluation and early warning, enrich and optimize macro-prudential policy tools, and explore and improve macro-prudential policy governance mechanisms , Strengthen the supervision of systemically important financial institutions and financial holding companies, do a good job in the coordination of macro-prudential policies and other policies, promote the implementation of macro-prudential policies and effectively improve my country’s systemic financial risk prevention and resolution capabilities.
(Article Source:BrokerageChina)
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