What s going on with the bank s RRR cut? What is the impact on deposits?

First, the People's Bank of China decided to reduce the reserve requirement ratio of financial institutions by one percentage point on December 15, 2021 (excluding financial institutions that have implemented a 5% reserve requirement ratio). After this reduction, the weighted average reserve ratio of financial institutions is as follows.

Since 2018, the People's Bank of China (PBoC) has lowered the reserve requirement ratio 11 times, releasing a total of about 9 trillion yuan of long-term funds. Among them, four RRR cuts in 2018 released one trillion yuan, three RRR cuts in 2019 released one trillion yuan, three RRR cuts in 2020 released one trillion yuan, and one RRR cut from the beginning of 2021 to July released about 1 trillion yuan.

Second, in order to support the development of the real economy and promote the steady and moderate reduction of comprehensive financing costs, the People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by one percentage point on December 15, 2021 (excluding financial institutions that have implemented a 5% deposit reserve ratio). After this reduction, the weighted average reserve ratio of financial institutions is as follows. The People's Bank of China will continue to implement a prudent monetary policy, adhere to the principle of stability, do not engage in flooding, take into account the balance between internal and external water, maintain reasonable and abundant liquidity, maintain the growth rate of monetary volume and social financing scale basically matching the growth rate of the nominal economy, strengthen cross-cycle adjustment, coordinate the macro policy convergence this year and next, support small and medium-sized enterprises, green development, scientific and technological innovation, and create a suitable monetary and financial environment for high-quality development and supply-side structural reform.

Third, the orientation of prudent monetary policy has not changed. Part of the funds released will be used by financial institutions to repay the maturity of the medium-term lending facility (MLF), and part of the funds will be used by financial institutions to supplement long-term funds to better meet the needs of market entities. The People's Bank of China adheres to a normal monetary policy, maintains the continuity, stability and sustainability of the policy, refrains from flooding, and creates a suitable monetary and financial environment for high-quality development and supply-side structural reform.

What is RRR Cut?

For example, if you go to the bank and deposit 100 yuan, the bank will use your money to lend again, but you can't release all of it, and you need to keep a certain amount of money in the central bank's pocket. Suppose he needs to keep 20 yuan in the central bank's pocket, then these 20 yuan is the deposit reserve. For example, if you only need to deposit 15 yuan, then the bank can lend up to 85 yuan, so more money will flow into the market and increase market liquidity.

The RRR cut is to increase the circulation of banknotes in the market in disguise, support the bubble of the market, cause the currency in the hands of the people to depreciate, the bank to take the opportunity to reduce the interest rate, and force the people to spend money. At the same time, the more money in circulation will also cause rounds of inflation.

1.On the surface, the central bank's RRR cut has nothing to do with deposit interest, but in fact, deposit interest may fall after the RRR cut. At present, China has gradually relaxed the restrictions on bank interest rates, whether it is loan interest rates or deposit interest rates, but at present, the deposit interest rates of many banks will be restricted by the bank interest rate self-discipline convention, so the general bank will not rise too high interest rates.

2.After the restrictions on deposit interest rates are relaxed, the major banks can set their own prices according to the actual situation of the market, if the funds are relatively tight, the deposit interest rate will rise by a higher range, and when the market funds are relatively loose, the banks will generally lower the deposit interest rate, so the amount of bank deposit interest has a great relationship with the tightness of market funds.

3.After the central bank announced the RRR cut, it will put a net of 900 billion yuan into the market, which has alleviated the tight situation of bank funds to a certain extent, making the bank's funds more loose, so that the bank's demand for deposits is not as strong as before, in this case, the bank may not raise the deposit interest rate too high, and may even reduce the range of the deposit interest rate.

4.Moreover, the central bank's RRR cut is a comprehensive RRR cut, which is different from the previous targeted RRR cuts, after this RRR cut, all banks will release funds, especially for some large banks, the released funds are a lot. For example, the current customer deposit balance of ICBC is about 21 trillion yuan, and if the deposit reserve ratio is reduced, ICBC will release 105 billion yuan of liquidity, which will ease the pressure on ICBC's deposits.

Therefore, once the central bank officially implements the RRR cut on September 16, the deposit interest rate of large banks may fall.

Further information: The central bank's RRR cut is simply a reduction in the bank's reserve requirement ratio. When it comes to bank deposit reserves, many non-professionals may not know what it means, the so-called deposit reserves, simply put, are the deposits prepared by financial institutions in the central bank to ensure that users withdraw deposits and fund liquidation needs.

The RRR cut has no impact on fixed deposits.

The interest rate cut has no effect on the completed fixed deposits, that is, the interest rate will be reduced after the deposit, and the deposit interest rate will remain unchanged. After the interest rate cut, the deposit rate will also be lowered accordingly.

There is no impact on fixed deposits that have already been deposited. However, interest rate cuts and RRR cuts may affect the time deposit rates that banks are implementing.

If it is an existing fixed deposit, the interest rate cut and the RRR cut will not have any impact.

In fact, the interest rate cut refers to the reduction of bank loan interest rates, the interest rate lent by banks is reduced, and the cost of loans for ordinary people is also reduced.

For example, the central bank's benchmark interest rate was before, but now the central bank has decided to cut the reserve requirement ratio by one percentage point, and after the interest rate cut, the actual central bank's benchmark lending rate has changed, so that everyone's loan interest will be reduced and bank profits will shrink.

From this, it can be inferred that the interest rate cut is actually to compress the profit of bank loans, tighten the money of banks, and let the interest rate of these loans benefit the people.

In addition to the conditions for interest rate cuts, banks can only maintain stable performance and growth rate by relying on small profits and quick turnover for the sake of their own interest. Therefore, banks are likely to issue more time deposits, and at the same time, they will also slightly increase the interest rate of time deposits, which is the biggest impact of interest rate cuts on time deposits.

What is the impact of the RRR cut on time deposits?

For example, before the central bank cut the reserve requirement, the bank needed to hand over 20 yuan to the treasury for every 100 yuan of savings, and when the central bank cut the reserve requirement, the bank only handed over 19 yuan for 100 yuan of savings, and another 1 yuan was left for the bank to lend.

The central bank's RRR cut is actually to release water to the bank, so that the bank has more money bags, and the bank itself has sufficient funds at this time, to put it bluntly, the bank is not short of funds.

It can be inferred from here that since banks are not short of funds, bank fixed deposits can naturally be compressed, the issuance volume can be reduced, and the interest rate on fixed deposits can be appropriately reduced, which is the biggest impact of the RRR cut on time deposits.

In summary, I have explained the meaning of interest rate cuts and RRR cuts respectively, and explained the impact of RRR cuts and RRR cuts on fixed deposits.

Among them, the interest rate cut is good for time deposits, and there is a high probability that the interest rate of time deposits will rise, and on the contrary, the RRR cut is unfavorable to time deposits, and there is a high probability that the interest rate of time deposits will be lowered, which is the impact of interest rate cuts and RRR cuts on time deposits.

The interest rate cut and the RRR cut will have no impact on the fixed deposits that have been deposited in the bank, but they will have a downward effect on the increase in depositors' fixed deposits in the future, and will also have a downward effect on the bank's profits.

No. Let's start with the deposit. Many banks have their deposit rates at the top of the central bank's benchmark interest rate. And the deposit rate will not change in the short term, so the central bank's RRR cut will not have an impact on the deposit rate.

The rate of return on wealth management will be reduced. Therefore, seeing that there is a suitable financial management with income can be purchased and the purchase time is longer, the loose monetary policy implemented by the state and the state will not change this year. Buy early to lock in high yields.

A RRR cut is a reduction in the reserve requirement ratio of banks. For example, if the bank has 100 yuan, the original reserve ratio is 10% (which means that it is mandatory to keep 100 * 10% = 10 yuan in the bank), but now it has to be reduced to 9%. Then, you can see that after the RRR cut, the market will change from the original 90 yuan currency circulation to 91 yuan currency circulation.

An increase in the amount of money in circulation will cause inflation. An interest rate cut is a reduction in the interest rate on bank loans. It is mainly to encourage investment behavior of enterprises, but it does not necessarily mean that the amount of money in circulation will increase as a result.

Therefore, the RRR cut is to put the currency in circulation, and the interest rate cut is to encourage investment. The central bank's RRR cut is to reduce the margin taken from the bank. The amount of money left by the bank increases, the amount of money that can be lent increases, and the liquidity of the market increases.

The RRR cut is not an interest rate cut, and the RRR cut is mainly aimed at banks.

To put it simply, the bank cut is to put more funds into the market. It is a kind of monetary policy, which can achieve abundant and abundant market funds by releasing funds.

The RRR cut refers to the reduction of the deposit reserve ratio by banks, which is the deposit reserve ratio of banks and financial institutions in order to ensure that customers are prepared in the settlement of daily deposits and funds, and a certain proportion of funds are deposited in the bank.

Advantages: 1. The bank has the initiative and is less affected by the outside world, which better reflects the policy intention of the central bank.

2. It has a rapid, powerful and extensive impact on the amount of currency.

3. Applies to all extended data:

The RRR cut "has a limited impact on the property market. First of all, the reduction of the reserve requirement ratio is super good for bank stocks, and at the same time good for **, good for the property market.

The reduction of reserves is only a hedge against the risk of a hard landing, which can be used for speculation, and if the policy strength exceeds market expectations, the best performers are bank stocks; But monetary policy is not a panacea for the future economic situation.

Disadvantages: 1. The policy effect is too violent and inflexible, and it is greatly affected by the excess reserves of banks in the banking system and cannot be used frequently.

2. Increase the instability of bank operations, and policy measures are not reversible to a certain extent.

of banks and depository financial institutions, the time and degree are fair and consistent.

The RRR cut by banks has no impact on deposits, and the RRR cut will not increase interest, but will reduce the proportion of reserve requirements. The so-called reserve requirement ratio means that after the bank absorbs deposits, it realizes that it cannot lend all the deposits, and in order to prevent risks, it must take out a part of it and put it into the central bank, which is similar to the meaning of insurance. For example, if a bank has a deposit of 100 billion yuan and the reserve ratio is 15%, then the bank can only lend 85 billion yuan at most, and must set aside 15 billion yuan as a reserve to cope with various possible payments.

If the reserve requirement is reduced to 10%, then the bank can lend 90 billion and only leave 10 billion reserves. Through the RRR cut, banks can take out more funds for lending under the condition that the total amount of deposits remains unchanged, which also means that the bank's demand for funds will shrink, the total amount of funds in the market will increase, the interest rate of funds will be reduced, and the income of various financial products will shrink. For more information about whether the bank RRR cut has an impact on deposits, go to see more content.