How does monetary policy revitalize stocks and improve efficiency?

The Central Economic Work Conference proposed: “Give full play to the dual functions of the total volume and structure of monetary policy tools, revitalize the stock, improve efficiency, and guide financial institutions to increase support for technological innovation, green transformation, inclusive small and micro businesses, and the digital economy. "This year, how can prudent monetary policy be flexible, appropriate, precise and effective? How to create a good monetary and financial environment for high-quality development?

Monetary policy is one of the main means of macro-control. In 2023, the prudent monetary policy will be precise and powerful to create a suitable monetary and financial environment for the economic recovery to improve. At present, my country's total monetary credit maintains reasonable growth, the credit structure continues to be optimized, and corporate loan interest rates are at a low level.

Revitalizing stocks and improving efficiency are important directions for monetary policy this year.

"The balance of loans in my country's banking system exceeds 200 trillion yuan, and the balance of social financing exceeds 300 trillion yuan. Revitalizing existing loans, improving the efficiency of existing loans, and optimizing the direction of new loans are equally important to support economic growth." The relevant person in charge of the People's Bank of China said that in the next stage, monetary policy will pay more attention to inter-cyclical and counter-cyclical adjustments, balancing the short-term and long-term, stabilizing growth and preventing risks, internal balance and external balance, in order to stabilize prices and promote the economy. We will create a sound monetary and financial environment by growing, expanding employment, and maintaining balance of international payments.

"Prudent monetary policy is flexible, appropriate, precise and effective. It is necessary to better utilize the dual functions of monetary policy tools in terms of total volume and structure, focus on expanding domestic demand, boost confidence, and promote a virtuous economic cycle." Zou Lan, Director of the Monetary Policy Department of the People's Bank of China According to the introduction, monetary policy will work from three aspects to create a good monetary and financial environment for high-quality economic development.

In terms of total volume, liquidity should be maintained at a reasonable and sufficient level, and the scale of social financing and money supply should match the expected goals of economic growth and price levels.

In terms of structure, we should give full play to the dual functions of the total volume and structure of monetary policy tools, revitalize the stock, improve efficiency, further enhance the guidance effectiveness of monetary and credit policies, closely follow major strategies, key areas and weak links, and focus on technology finance, green finance, 5 articles on inclusive finance, pension finance, and digital finance.

In terms of prices, we will promote a steady but moderate decrease in comprehensive social financing costs and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

Wen Bin, chief economist of Minsheng Bank, believes that it is necessary to strengthen the coordination between monetary policy and fiscal, industrial, regional, and scientific and technological policies, enhance the consistency of macro policy orientation, and form a joint force to jointly promote high-quality development.