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Knowledge: What does refinance mean? Role

Time: 2014-07-07         Source: Financial 360 finishing         Author: well-off

  RefinanceWhat means? againloanIt refers to the loans issued by the Central Bank to financial institutions to achieve the objectives of monetary policy. China's refinancing has two meanings. Narrowly defined refinancing refers to the general term of central bank loans to financial institutions; broad reloan refers to the concept of refinancing, including rediscounting of bills. However, rediscounting one of the three magic weapons that is traditional as a monetary policy tool should be excluded from the scope of refinancing.

The role of refinancing is mainly reflected in the following aspects:

1, adjust the money supply. During the period of rapid economic growth from 1984 to 1993, refinancing has always been an important channel for the central bank to handle the base currency. The refinancing of loans will make up for the shortage of key funds, adjust the industrial structure, adjust the balance of funds between regions or departments, and promote economic growth. Growth has played a vital role.

2, insufficient adjustment position. In order to achieve the goal of national economic growth, the People's Bank of China, in accordance with the money supply growth plan, will issue refinancing to financial institutions in a timely manner to flexibly adjust the liquidity of commercial banks, thereby affecting the ability of commercial banks to expand their loans.

3. Stabilize the economic and financial order. In 1998, affected by the financial turmoil in Asia, the poor management of a few financial institutions caused a payment crisis. The Central Bank played the role of the lender of last resort in a timely manner to issue emergency loans to crisis-affected small and medium-sized financial institutions, eased payment pressure, and controlled the payment crisis. Quickly and effectively stabilized the financial situation. The refinancing of financial institutions that have closed or cancelled liquidation is used for personal debt redemption, which resolves local financial risks and ensures the safety of one party.

4. Support financial system reform. In order to coordinate with the reform of China's financial system, we will issue refinancing to policy banks, asset management companies, commercial banks, and rural credit cooperatives in a timely manner to ensure a smooth transition during the transition period.


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