The central bank and the foreign exchange bureau set the tone, and they are ready to do so in 2024!

On January 4~5, the central bank held a 2024 work conference to study and deploy key tasks in 2024.

For the key work in 2024, the central bank put forward ten specific directions. It includes a prudent monetary policy that is flexible, moderate, precise and effective, focusing on the "five major articles" to support key areas and weak links, continuing to strengthen the construction of the financial market, steadily promoting the prevention and resolution of financial risks in key areas, actively participating in international financial governance, deepening international financial cooperation, and promoting high-level opening-up, steadily and steadily promoting the internationalization of the RMB, continuing to deepen financial reform, continuously improving the level of financial services and management, and solidly promoting institutional reform and business process optimization and reengineering.

For the key work of foreign exchange management in 2024, the State Administration of Foreign Exchange (SAFE) has put forward six specific objectives, including deepening the reform and opening up of the foreign exchange sector, preventing cross-border capital flow risks, strengthening the full coverage of foreign exchange supervision, and improving the operation and management of foreign exchange reserves with Chinese characteristics.

Ensure that the scale of social financing can grow at a sustained and rapid pace throughout the year

In terms of monetary policy, the central bank meeting emphasized that the prudent monetary policy is flexible, moderate, precise and effective. We should make comprehensive use of a variety of monetary policy tools to maintain reasonable and sufficient liquidity, and promote the matching of the scale of social financing and money supply with the expected targets of economic growth and price levels. Pay attention to the balanced allocation of new credit, improve the efficiency of the use of existing funds, further optimize the credit structure, and ensure that the scale of social financing can grow sustainably and rapidly throughout the year. In terms of prices, we will take into account the balance between internal and external, continue to deepen the market-oriented reform of interest rates, and promote the steady and moderate decline of comprehensive social financing costs. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

In addition, the meeting proposed to focus on the "five major articles" to support key areas and weak links. It also proposed that the implementation of carbon emission reduction support tools, the implementation of special re-loans for inclusive pension will be continued, and the long-term mechanism of supporting rural and small re-loans, re-discounting, and inclusive small and micro loan support tools will continue to serve inclusive finance.

This means that in 2024, the monetary policy will remain reasonable in terms of aggregates, and the support of money and credit to the real economy will be stabilized. In terms of structure, we strive to be precise and continue to increase support for major strategies, key areas and weak links.

The Bank of China Research Institute report predicts that the monetary policy in 2024 will stabilize the total supply of funds and effectively meet the financing needs of the real economy. On the one hand, we will comprehensively use tools such as RRR cuts and open market operations to maintain reasonable and sufficient liquidity, guide financial institutions to increase credit supply according to the needs of the real economy, ensure the desired scale of capital supply, and provide a stable and appropriate financing environment for the development of the real economy. On the other hand, we should comprehensively consider factors such as the capital demand of enterprises and the trend of the price level, flexibly adjust the pace of policies, guide the credit allocation of financial institutions to match the demand of the real economy, prevent excessive increase in capital supply to promote the recovery of the price level, and avoid further pushing up the macro leverage ratio.

Strengthen the monitoring and analysis of the operation of the real estate market

In terms of risk prevention, the central bank meeting proposed to steadily promote the prevention and resolution of financial risks in key areas. Specifically, it mentions three aspects: real estate, small and medium-sized financial institutions, and local government debt.

The central bank said that it will guide financial institutions to rationally use debt restructuring and replacement in accordance with the principles of marketization and rule of law to support the resolution of debt risks of financing platforms. Strengthen the monitoring and analysis of the operation of the real estate market. Due to the city's policies, we will accurately implement differentiated housing credit policies, meet the reasonable financing needs of various real estate enterprises, and do a good job in the implementation of various policies such as the "16 Financial Measures" and financial support for the construction of affordable housing, the construction of public infrastructure for "level-emergency and emergency", and the transformation of urban villages. Promote the resolution of risks of small and medium-sized financial institutions, promote the risk disposal of key institutions, improve the early correction mechanism with hard constraints, and strengthen the professional and normalized risk disposal function of deposit insurance. We will continue to strengthen the financial stability guarantee system.

In order to promote the construction of the "three major projects" such as affordable housing, recently, the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China have a net new mortgage supplementary loan (PSL) of 350 billion yuan, and the balance of the mortgage supplementary loan at the end of the period is 3,252.2 billion yuan.

Dong Ximiao, chief researcher of Zhaolian Financial, told Yicai that PSL has three characteristics: first, a long term (up to 5 years) to release medium and long-term liquidity, second, precise drip irrigation, which supports specific projects by providing funds to policy banks, and third, it is equivalent to the central bank's base money, which has both the dual functions of total volume and structure. This move will help promote the steady and healthy development of the real estate market, and also send a positive signal that the monetary policy will be more flexible, moderate, precise and effective, which will help further stabilize market confidence and expectations.

RMB internationalization: Promote the use of RMB in key enterprises, key sectors and key regions

In 2023, significant progress was made in the internationalization of the RMB.

The Central Financial Work Conference held earlier pointed out that it is necessary to accelerate the construction of a financial power, expand high-level financial opening-up, and steadily and steadily promote the internationalization of the RMB.

The central bank said that it will further improve the policy system to facilitate the cross-border use of RMB, and propose to promote the use of RMB by key enterprises, key areas and key regions.

In addition, the central bank also said that it will optimize the layout of RMB clearing banks, strengthen international monetary cooperation, and promote the healthy development of the offshore RMB market. Strengthen the supervision of cross-border RMB business. Intensify the construction and expansion of cross-border payment systems.

The first financial reporter learned that the "2023 Report on the Use of RMB in ASEAN Countries" was released recently, and with the help of a series of opportunities such as the Regional Comprehensive Economic Partnership (RCEP), the opening and cooperation between China and ASEAN have been further deepened, and the use of RMB in ASEAN has achieved new development.

As of the end of 2022, China has signed bilateral local currency settlement agreements with Vietnam, Indonesia, Cambodia and Laos, with the amount of China-ASEAN bilateral local currency swap agreements exceeding 800 billion yuan, and in 2022, the amount of cross-border RMB receipts and payments under the China-ASEAN current account and direct investment increased by 60.7% and 13.4% year-on-year, respectively, 28.8 and 2.39 percentage points higher than the national average growth rate. In addition, the RMB cross-border clearing network in the ASEAN region has begun to take shape. The construction of RMB clearing banks in Singapore, Malaysia, Thailand and the Philippines has been steadily promoted, and the second-generation RMB cross-border receipt and payment information management system has been officially put into operation.