Founded by the People's Bank of China on September 20 14. Medium-term lending facility is a monetary policy tool for the central bank to provide medium-term base currency, which can be carried out by bidding for commercial banks and policy banks that meet the requirements of macro-prudential management. The issuance method is pledge, and high-quality bonds such as government bonds, central bank bills, policy financial bonds and high-grade credit bonds need to be provided as qualified pledges.
The targets are commercial banks and policy banks that meet the requirements of macro-prudential management, which can be carried out through bidding. The issuance method is pledge, and high-quality bonds such as government bonds, central bank bills, policy financial bonds and high-grade credit bonds need to be provided as qualified pledges.
For example:
Xiaoming has a lot of assets, but he has no money at hand, so he borrows money from his mother and uses part of his assets as collateral. The loan period is three months, which is SLF (known as "hot and sour powder" in the industry). Later, Xiao Ming ran out of money. He told his mother that he would still use assets as collateral, but for his son's sake, could it last longer? His mother said yes, the loan period is six months. This is MLF (industry).
Extended data:
major function
The medium-term lending convenience interest rate plays the role of medium-term policy interest rate. By adjusting the medium-term financing cost of financial institutions, it affects the balance sheet and market expectation of financial institutions, guides them to provide low-cost funds to the real economic sector that conforms to the national policy orientation, and promotes the reduction of social financing costs.
Market interpretation
Medium-term loan facilitation MLF is a new measure, which confirms the market's speculation on medium-term credit financing tools.
Compared with the Standing Loan Facility (SLF), the difference is not obvious, but the medium-term liquidity management tool can stabilize everyone's expectations. Creating medium-term lending facilities can not only meet the current requirements of the central bank to stabilize interest rates, but also not directly put the base currency into the market. This is a satisfactory solution.
The medium-term lending facility reflects the adjustment of the basic principles of China's monetary policy, namely, maintaining pressure, directional regulation, structural adjustment, pre-adjustment and fine-tuning.
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