CCTV News: According to the arrangements of the People's Bank of China, the first reserve requirement ratio cut will be implemented this year on May 15. Starting from May 15, the deposit reserve ratio of financial institutions will be lowered by 0.5 percentage points (excluding financial institutions that have implemented a 5% deposit reserve ratio), and the deposit reserve ratio of auto finance companies and financial leasing companies will be lowered by 5 percentage points. The deposit reserve ratio is reduced by 0.5 percentage points and is expected to provide the market with a long-term liquidity of about 1 trillion yuan. The reduction of deposit reserve ratios of auto finance companies and financial leasing companies from the original 5% to 0%, which will enhance the credit supply capacity of these two types of institutions for specific fields.

1 trillion is coming! What is the impact of the first reserve requirement cut this year?

What impact will this reserve requirement ratio cut have on the real economy? What does it have to do with the people? Let’s take a look at the interpretation of Lao Wang, a reporter from CCTV.

CCTV reporter Wang Lei: 1 trillion is coming! On May 15, the People's Bank of China lowered the reserve requirement ratio of financial institutions by 0.5 percentage points, which also means that the first reserve requirement ratio cut was officially implemented this year, providing about 1 trillion yuan of long-term funds to the financial market.

Someone asked Lao Wang, is this 1 trillion yuan given directly to enterprises or individuals?

To answer this question, let's first figure out what is a reserve requirement cut. Simply put, lowering the reserve requirement ratio can increase the use of banks to issue loan funds. Assuming that the deposit reserve ratio stipulated by the central bank is 10%, then banks can only use 9,000 yuan to issue loans for every 10,000 yuan of deposit, because 10% of the deposits must be handed over to the central bank for "custody" and cannot be moved. After the reserve requirement ratio is cut, for example, if the reserve requirement ratio is cut to 9%, the bank can use 9,100 yuan to issue loans for every 10,000 yuan, and an additional 100 yuan will be added. Therefore, this cut in the reserve requirement ratio means that banks can lend more than 1 trillion yuan to enterprises and individuals. Moreover, this money is long-term low-cost funds, which can increase support for key areas and weak links such as consumption, foreign trade, scientific and technological innovation, and small and micro private enterprises, and enhance the motivation and sustainability of serving the real economy.

There is also good news today, that is, the deposit reserve ratio of auto finance companies and financial leasing companies has dropped from the current 5% to 0%, which will also release a considerable amount of long-term low-cost stable funds for these two types of institutions. What does this have to do with everyone? These two types of institutions are directly targeted in the fields of automobile consumption, equipment renewal investment, etc. For example, after the deposit reserve ratio is reduced by zero, the funds obtained by auto finance companies will increase significantly and the costs will also drop. It will have the ability to attract consumers to buy cars with more preferential interest rates and more flexible loan solutions. People will have more discounts in buying cars with loans, and there will be more choices. Financial leasing companies can invest the funds released by the reduction of the reserve requirement ratio in industries such as equipment manufacturing, new infrastructure construction, and clean energy.

Simple summary, the money released after the reserve requirement ratio cut can be used to issue loans and make investments, or by releasing long-term low-cost funds, it can promote banks to reduce loan interest rates, support the financing needs of enterprises, especially small and medium-sized enterprises, and more importantly, it sends a positive signal of clear and stable growth!