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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CHINA
- For most of 2020, the PBoC balance sheet remained steady at around CNY 36.5tr CNY despite the Covid19 shock.
Meanwhile, western central banks' balance sheets expanded considerably after undertaking sizeable asset purchase programmes. - However, the chart below shows that PBoC assets have been rising in recent months; PBoC assets nearly reached a total of CNY 39trl in June, up 7.1% YoY, its fastest pace of increase since December 2016.
- In the past few months, we have also seen that Chinese 'liquidity', which we define as the annual change in the Total Social Financing (TSF), has been contracting sharply, from an increase of CNY 10trl in October 2020 to a drop of nearly CNY 2trl, and has been weighing on both domestic and international asset prices.
- In order to ease financial conditions and stimulate both financial assets and economic activity (which has been decelerating since February), China officials decided to cut the RRR to major banks by 50bps to 12% last month.
- It will be interesting to see if the PBoC will continue to loosen policy by expanding the size of its balance sheet, trying to offset the significant contraction in aggregate financing (which includes the drastic fall in real money growth).
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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