Where does the money go? Deposits fell by nearly 4 trillion yuan in April, experts: the supervision of deposits will help to activate funds, and the growth rate of money supply should stabilize in the future

National Business Daily

2024-05-13 20:03Published on the official account of Sichuan Daily Economic News

Every reporter: Xiao Shiqing Every editor: Liao Dan

In April, the financial data was released, among which the growth rate of M2 and M1 fell and attracted much attention from the outside world.

The market believes that due to the impact of the "relocation" of deposits, the growth rate of M2 and M1 continues to decline. According to the data, the mainland's RMB deposits increased by 7.32 trillion yuan in the first four months, a decrease of 3.92 trillion yuan compared with 11.24 trillion yuan in the first quarter, equivalent to a decrease of nearly 4 trillion yuan in a single month in April.

Behind the move of "deposits", the scale of bank wealth management products is rising suddenly. According to the research and estimation of CITIC Securities, the scale of wealth management in April 2024 will increase by about 2.3 trillion yuan month-on-month to 28.63 trillion yuan.

Dong Ximiao, chief researcher of Zhaolian, told reporters that the important reason for the downward adjustment of M2 growth rate is the diversion of deposits to wealth management products. The majority of M2 is corporate and resident deposits. With the recent recovery of the wealth management market and the rise in investment yields, residents' enthusiasm for purchasing wealth management products has rebounded, and residents' deposits have accelerated their transformation into wealth management products.

The growth rate of M2 and M1 continued to decline

According to the definition of the mainland, the money supply is the money stock of the whole society, and is the sum of the financial instruments that assume the means of circulation and payment at a certain point in time. At this stage, the mainland's money supply is divided into three levels: M0, M1, and M2. M0, often referred to as "cash", is the most active and liquid; M1 is M0 plus a unit demand deposit with slightly less liquidity; M2 is M1 plus less liquid unit time deposits, resident deposits, etc.

Recently, the growth rate of M2 and M1 has continued to decline. M1 had negative growth in January 2022, down 1.9% year-on-year. The central bank pointed out in the report at that time: "Before the Spring Festival, due to the centralized payment of salaries and benefits by enterprises, the current deposits of units will be transferred to individual deposits, resulting in a large decrease in M1." The last working day before the Chinese New Year in 2022 is January 30, compared to February 10 in 2021. ”

The reporter noted that although the year-on-year growth rate of M2 and M1 is declining, the scissors gap between M2 and M1 has been expanding in recent months, and has now reached 8.6 percentage points.

Wang Qing, chief macro analyst of Oriental Jincheng, said that in recent years, the "scissors gap" between M2 and M1 growth rates has continued to be at a high level, mainly due to the decline in residents' demand for housing in the context of the downturn in the real estate market, and the transfer of residents' deposits to real estate demand deposits has been blocked; At the same time, under the downward pressure of the economy, the activity of enterprise operation and investment is weak, and the proportion of capital "activation" has declined. The obviously low M1 growth rate and the high "scissors difference" between M2 and M1 growth rates indicate that there is an urgent need to boost the endogenous growth momentum of the economy by effectively stimulating domestic demand and boosting the activity of the real economy, especially by promoting the real estate industry to achieve a soft landing as soon as possible.

For the growth rate of M1 and M2 both declined, some experts mentioned in an interview with reporters that this means that deposits are being diverted from the banking system.

Judging from the deposit data, RMB deposits increased by 7.32 trillion yuan in the first four months. Among them, household deposits increased by 6.71 trillion yuan, deposits of non-financial enterprises decreased by 1.65 trillion yuan, financial deposits decreased by 187.4 billion yuan, and deposits of non-banking financial institutions increased by 1.23 trillion yuan.

In the first four months, the mainland's RMB deposits increased by 7.32 trillion yuan, but decreased by 3.92 trillion yuan from 11.24 trillion yuan in the first quarter. This is equivalent to a decrease of nearly 4 trillion yuan in deposits in a single month in April.

Where did the deposit go?

The interviewed experts believe that due to the impact of the "relocation" of deposits, the year-on-year growth rate of M1 and M2 has declined.

Dong Ximiao pointed out that the important reason for the downward adjustment of M2 growth rate is the diversion of deposits to wealth management products. The majority of M2 is corporate and resident deposits. With the recent recovery of the wealth management market and the rise in investment yields, residents' enthusiasm for purchasing wealth management products has rebounded, and residents' deposits have accelerated their transformation into wealth management products.

At the same time, Dong Ximiao believes that some companies invest demand deposits in wealth management products, which is also one of the reasons for the decline in M1 speed. According to the data, the scale of wealth management products increased by about 2 trillion yuan month-on-month in April. With the development of direct financing, the growth rate of M2 may slow down in the future, but this is not a weakening of financial support, but a reflection of the optimization of financing structure and the improvement of financial quality and efficiency, which is conducive to better meeting the financing needs of the real economy and reducing the macro leverage ratio.

The reporter noted that according to the research and estimation of CITIC Securities, the scale of wealth management in April 2024 increased by about 2.3 trillion yuan month-on-month to 28.63 trillion yuan.

Wen Bin, chief economist of Minsheng Bank, believes that the slowdown in the growth rate of money supply is affected by a combination of multiple factors. First, since the beginning of the year, the bond market has been bullish to boost the yield of asset management products such as wealth management, and bank deposits have been diverted to wealth management. Second, the regulatory authorities have increased the regulation of idling arbitrage of funds and manual interest payments by banks, and squeezed out some of the inflated deposits and loans. Third, the accounting of the added value of the financial industry has been optimized, and the motivation of individual local governments to increase the added value of finance through the expansion of deposits and loans has been significantly weakened.

Ming Ming, chief economist of CITIC Securities, said that the obvious decline in the growth rate of money supply is mainly due to the fact that since April, many deposit funds have been transferred to asset management products such as bank wealth management under the background of strict supervision of seasonal factors and manual interest payments. The decrease in deposits of residents and enterprises confirms the phenomenon of "deposit moving", and the year-on-year decrease in fiscal deposits is mainly due to the slow process of government bond issuance, considering that government bond financing decreased by 550 billion yuan compared with the same period last year, which reflects that the current pace of fiscal expenditure may have slowed down marginally.

It should be noted that Ming Ming believes that "the decline in the growth rate of money supply is mainly due to the supervision of some non-compliant deposit products, and it is also related to the current more diversified wealth management methods, which cannot be interpreted one-sidedly as a decline in the ability of finance to support the real economy; ”

Expert: The growth rate of money supply should stabilize in the future

As for the total money supply, the central bank pointed out in the recently released monetary policy implementation report that the growth of the huge monetary aggregate may slow down, which does not mean that the intensity of financial support for the real economy has decreased, but it is a reflection of the improvement of the quality and efficiency of financial support.

The central bank said that in the first quarter of 2024, China's monetary policy implementation report pointed out that the current money stock is already quite large. For quite a long time in the past, the mainland's economy maintained high-speed growth and continued to increase its economic volume, which would bring about an increase in the demand for funds. The People's Bank of China (PBoC) has made great efforts to regulate the "general gate of money supply", but it has also had a great impact on the structural problems of deposits and loans, such as "where the money goes, where does the money go". The direction of loan investment mainly depends on the demand for bank credit from different types of borrowers, and the flow of deposits between various business entities is more affected by whether the supply and demand of the real economy are balanced and whether the circulation is smooth. It should also be noted that at present, the mainland's economic restructuring, transformation and upgrading are accelerating, the economy is becoming lighter, and the credit structure is also being optimized and upgraded.

The central bank said that it should also be noted that direct financing is accelerating its development, and in the future, with the further expansion of the scale of bonds such as counter bonds and corporate bonds, these investment and financing activities have not been realized through traditional bank deposit and loan business, and the deposit and loan and money supply will also decline. In fact, the continuous development of this type of direct financing is more conducive to the optimal allocation of resources, the efficiency of capital use is improved, and the role of indirect financing will decline accordingly. Internationally, the more developed economies of direct financing no longer use the money supply as the intermediary target of monetary policy.

The central bank said that in the next stage, the prudent monetary policy will be flexible, moderate, precise and effective, guide the reasonable growth and balanced delivery of credit, revitalize the stock of financial resources, and keep the scale of social financing and money supply in line with the expected targets of economic growth and price levels. At the same time, we will support the joint efforts of policies to effectively mobilize the use of funds by business entities, so as to better realize that residents dare to consume, enterprises are willing to invest, and the government can support them, so as to promote the smooth circulation of the real economy.

Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, told reporters that with the transformation and upgrading of the mainland's economic industry structure, the credit structure is also changing, and the credit growth rate of traditional asset-heavy and inefficient industries has slowed down, while the weak links, key emerging areas and service asset-light industries have maintained rapid growth in credit, which may also lead to a slowdown in the growth rate of money supply, but the actual credit support economic efficiency is improved. At present, the year-on-year growth of M2 is basically in line with the nominal economic growth rate, and the market liquidity remains reasonable and abundant, reflecting that the current monetary environment continues to provide strong support for the economic recovery.

Wen Bin believes that in the next few months, with the gradual improvement of the financing demand of the real economy, the acceleration of government financing and the gradual return of the bond market to the fundamental logic, the growth rate of money supply should stabilize.

National Business Daily

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