The Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five Year Plan for National Economic and Social Development proposes to improve the central banking system, establish a scientific and stable monetary policy system and a comprehensive macro prudential management system, and smooth the transmission mechanism of monetary policy. Recently, Pan Gongsheng, the Governor of the People's Bank of China, stated at the 2025 Financial Street Forum Annual Meeting that the central bank is exploring institutional arrangements to provide liquidity to non bank institutions in specific scenarios. Industry insiders believe that this exploration means that the central bank is filling the "last mile" of monetary policy transmission, promoting liquidity support from an indirect delivery model centered on the banking system to a direct delivery mechanism that covers more financial institutions. This move is expected to play a stabilizing role in extreme market conditions, and also marks the transition of China's monetary policy from "total adjustment" to "structural optimization" and from "banking center" to "full market coverage". The central bank's proposal to explore providing liquidity support to non bank institutions is seen by the market as another structural improvement of the monetary policy tool system. Industry insiders say that this is not only a forward-looking response from the policy level to the market liquidity situation, but also reflects the central bank's increasingly refined regulatory measures. The central bank's toolbox has multi-level regulatory capabilities. Wang Yunjin, the chief financial researcher of Guangkai Chief Industry Research Institute, told the Shanghai Securities News that at present, there are many tools in the monetary policy toolbox of the People's Bank of China to directly or indirectly put liquidity into the market, including short-term reverse repurchase, outright reverse repurchase, open market treasury bond buying and selling, medium-term lending facilities, standing lending facilities, mortgage supplementary loans, deposit reserve ratio, refinancing rediscount and structural monetary policy tools. Most tools are operated on commercial banks, and the central bank usually releases liquidity indirectly to non bank financial institutions through the transmission of the banking system. But in recent years, the central bank has also begun to establish a direct delivery mechanism for non bank institutions to further enhance policy transmission efficiency. ”Wang Yunjin said. It is reported that at present, the central bank's main tools directly facing non bank institutions include two types: one is the swap facilities for securities, funds, and insurance companies. The quota shares 800 billion yuan with the "stock increase repurchase and refinancing". Non bank institutions are allowed to exchange bonds, ETFs, and other assets for treasury bond or central bank bills and other high-level assets to improve liquidity management flexibility; The second is the purchase and sale of treasury bond in the open market. From September to December 2024, the central bank will invest an equal amount of liquidity in the market by buying about 1 trillion yuan of treasury bond net, and the counterparties include banks and some non bank institutions. The market is generally concerned about the innovative direction of the proposed "explore new mechanisms". According to a research report by CITIC Securities, the central bank's liquidity management framework will undergo a new structural upgrade. Considering that the current monetary policy toolbox of the central bank already includes short-term liquidity tools such as collateralized buybacks, the new mechanism arrangements for non bank institutions that will be introduced in the future are more likely to be a liquidity tool aimed at maintaining capital market stability in extreme situations. The central bank's exploration of providing liquidity support to non bank institutions is a forward-looking consideration for financial market stability and risk prevention, which will help maintain financial market stability. In recent years, non bank financial institutions such as securities companies, fund management companies, insurance asset management companies, and trust companies have rapidly developed and become important participants in the capital market. Zeng Gang, Chief Expert of Shanghai Finance and Development Laboratory, told Shanghai Securities News reporters that non bank institutions now manage assets worth tens of trillions of yuan and are deeply involved in various financial markets such as bond markets, stock markets, and derivative markets. The business models of these institutions often involve term conversion, credit conversion, and liquidity conversion, which naturally exposes them to liquidity risk. From international experience, the liquidity risk of non bank institutions often has suddenness and contagion. ”Zeng Gang stated that although China has not experienced a systemic non bank liquidity crisis, it should take precautions and establish a firewall in advance. At present, the central bank's liquidity support mainly targets commercial banks. If non bank institutions encounter financial difficulties, they can only indirectly obtain liquidity through banks or realize assets on their own. Under market pressure, banks may be reluctant to lend due to risk considerations, which may hinder policy transmission. Wang Yunjin stated that reserving necessary non bank liquidity tools can not only provide timely "bottoming out" in extreme situations, prevent local risks from evolving into systemic crises, but also make up for policy transmission gaps and enhance the accuracy and timeliness of monetary policy. The funding situation of non bank institutions directly affects the trading activity of bonds and stocks. Moderate liquidity support can stabilize market expectations, reduce credit spreads, and improve the financing environment for enterprises. Multiple institutions believe that the deep logic behind the central bank's exploration of providing liquidity support to non bank institutions is to fill the gaps in monetary policy transmission and strengthen its role as the "lender of last resort". According to a research report by Huatai Securities, China's monetary policy has long relied on the banking system for transmission. However, in some extreme market conditions, if the risk appetite of banks drops sharply or intermediate links are obstructed, non bank financing channels are prone to "discontinuity", which can lead to global liquidity tension. Exploring mechanisms to provide liquidity to non bank institutions can not only serve as emergency "safety valves", but also enhance the coverage and flexibility of central bank policy tools, making policy effectiveness more direct and precise. We need to strengthen the construction of supporting systems. However, in order to truly implement the concept of "direct access to non banks", policy design requires more systematic legal, operational, and regulatory support. Wang Yunjin said that in the future, the Central Bank may also create more liquidity delivery tools for non bank institutions, such as the Federal Reserve's primary dealer credit facilities and standing repo facilities. Non bank institutions can obtain loans by mortgage of treasury bond, corporate bonds, commercial paper, ABS and other qualified collateral. Meanwhile, different types of institutions may face different thresholds. Zeng Gang suggested that for systemically important non bank institutions, a standing lending facility tool can be established, but higher collateral quality and punitive pricing are required; For general non bank institutions, temporary tools can be activated to provide phased support in situations such as market volatility and liquidity tightening. At the institutional level, Zeng Gang believes that there should be three aspects to promote: first, clarifying legal authorization, specifying the responsibilities, conditions, and constraints of the central bank in providing liquidity support in specific situations within the legal framework; Secondly, we need to improve operational standards, clarify the criteria for qualified counterparties, the scope of collateral, pricing mechanisms, and scale control methods; The third is to strengthen regulatory linkage, coordinate liquidity support mechanisms with non bank institution supervision, bankruptcy disposal, investor protection and other systems, and avoid arbitrary support decisions. The liquidity support mechanism cannot remain unchanged, and a regular evaluation and optimization mechanism should be established. ”Zeng just said. (New Society)