On March 19th, it was reported that the Party Committee of the People's Bank of China recently held an expanded meeting and proposed to continue implementing a moderately loose monetary policy. Making the promotion of stable economic growth and reasonable price recovery an important consideration of monetary policy, and leveraging the integrated effects of incremental and stock policies, as well as monetary and fiscal policies. Long, medium and short term monetary policy tools such as deposit reserve ratio, buying and selling treasury bond, medium term lending facility (MLF), reverse repo, etc. are comprehensively used to maintain sufficient liquidity, so as to match the growth of social financing scale and money supply with the expected goal of economic growth and overall price level. The meeting pointed out that according to the changes in the economic and financial situation and the macroeconomic operation, we should guide and regulate the level of interest rates, strengthen the implementation and supervision of interest rate policies, standardize financing intermediary costs, and promote the low operation of comprehensive financing costs in society. Communicate effectively with the market and enhance policy transparency. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. The meeting also pointed out the need to strengthen financial services in key areas and weak links. We will coordinate the five major financial policies, focusing on key areas such as supporting the expansion of domestic demand, technological innovation, and small and medium-sized enterprises, optimizing structural monetary policy tools, and improving implementation methods. Strengthen coordination and cooperation with fiscal policies in areas such as interest subsidies, guarantees, and risk cost sharing, and amplify policy effects. Guide financial institutions to enhance their service capabilities, intensity, and level, and support economic structural adjustment and transformation and upgrading. Industry insiders believe that based on the government work report and the deployment of the central bank's meeting, the tone of "moderately loose" monetary policy this year remains unchanged, but the implementation method has changed. On the one hand, while the dual tools of "total amount+structure" are working together, the implementation of structural monetary policy tools will be further optimized and improved. Data shows that as of the end of January this year, the scale of various structural monetary policy tools was about 5.5 trillion yuan, accounting for approximately 11% of the central bank's total assets on its balance sheet. At the beginning of this year, the People's Bank of China issued multiple incremental policy measures involving structural monetary policy tools, including lowering tool interest rates, expanding the scale and scope of support, and improving policy elements. This year, the focus of structural monetary policy tools will be on supporting the expansion of domestic demand, technological innovation, and small and medium-sized enterprises, "said Pan Gongsheng, Governor of the People's Bank of China. On the other hand, in terms of bridging the "last mile" of monetary policy transmission and promoting the low operation of comprehensive social financing costs, policies will continue to be strengthened. In terms of interest rates, we will strengthen the implementation and supervision of interest rate policies, and strengthen the regulation of some unreasonable market behaviors that are prone to reducing the transmission of monetary policy. Require banks to clearly display the annualized comprehensive financing cost of loans to enterprises and standardize financing intermediary fees. ”Pan Gongsheng stated. Lin Yaheng, a macro strategy analyst at Southern Fund, said that the central bank's relevant deployment is expected to improve the transparency of financing costs, compress "shadow fees" and arbitrage space, regulate financial supply behavior, and further improve the financing environment for small and medium-sized enterprises. This policy also reflects that the transmission mechanism of monetary policy is shifting from 'overall easing' to 'structural optimization', not only to 'increase money', but also to 'make money more directly reach the real economy'. Standardizing intermediate financing costs is essentially repairing the pricing mechanism of the financial system, and is an important step in promoting the shift from policy goals to actual results in reducing comprehensive social financing costs. ”Lin Yaheng said. The coordination between monetary and fiscal policies will also be further strengthened. The government work report points out that a special fund of 100 billion yuan will be established this year to promote domestic demand through fiscal and financial coordination. The meeting also emphasized the need to strengthen coordination and cooperation with fiscal policies in areas such as interest subsidies, guarantees, and risk cost sharing, and to amplify policy effects. Sheng Songcheng, Dean of the China Chief Economist Forum Research Institute, stated that the coordination and cooperation between fiscal policy and monetary policy are important prerequisites for achieving a good start to the 15th Five Year Plan. From the perspective of overall quantity, monetary policy cooperates with fiscal policy through medium - and long-term liquidity injections (such as reserve requirement ratio cuts) and policy interest rate adjustments to ensure the smooth issuance of government bonds and stabilize financing costs, thereby expanding total demand; From a structural perspective, the two focus on areas such as technological innovation, boosting consumption, and weak economic links through new tools, relying on the complementary mechanism of "debt+equity" tools to accurately promote structural adjustment and development. (New Society)