Editor's Note: As early as March 20 14, Sheng Songcheng, then director of the Survey and Statistics Department of the People's Bank of China, published an article "The Management of Yu 'ebao and Deposit Reserve" in the Financial Times, proposing that "the deposits invested by Yu 'ebao should be managed by bank reserve deposits" (the deposit reserve is not directly collected from Yu 'ebao itself, but paid as a statutory deposit reserve after Yu 'ebao is deposited in the bank). Because Yu 'ebao's deposit in the bank does not need to pay the deposit reserve, and other factors, this has formed unfair competition, which makes Yu 'ebao's income much higher than that of ordinary deposits, and also caused a series of problems (including regulatory issues). Sheng Songcheng's article finally pointed out that "all financial businesses should follow the principle of unified supervision to ensure fair competition in the market, prevent and control financial risks, and realize the safe, stable and effective operation of the entire financial system". This is an article published by Sheng Songcheng nearly seven years ago, many of which have been proved by time and have practical significance. Now reprint this article for readers.
In recent years, with the rapid development of big data, cloud computing, mobile Internet and other information technologies, the integration of the Internet and the financial industry has deepened. While the financial industry is rapidly touching the Internet, Internet companies are also rapidly involved in the financial industry by means of third-party payment, peer-to-peer lending, crowdfunding and online financial product sales, and their scale and influence are constantly expanding. On the one hand, Internet financial products broaden residents' investment channels and improve the flexibility and convenience of financial services, on the other hand, they also put forward new topics for macro-financial management and financial risk prevention.
For Internet finance, most people's opinions so far are that innovation should be allowed and supervision should be improved. Internet finance has many forms of existence, and naturally it also involves various financial supervision. Yu 'ebao product is one of the main varieties of Internet finance, which has the greatest impact on financial operation. We believe that the supervision of Yu 'ebao involves the management of deposit reserve.
Yu 'ebao was established in June 20 13. By the end of February, 20 14, the users of Yu 'ebao had exceeded 80 million, and the corresponding assets of Tian Hong Zenglibao Fund had exceeded 500 billion yuan, accounting for more than half of all money market funds. The funds managed by Tian Hong Fund in 20 12 years are insufficient 10 billion yuan. With the help of Yu 'ebao, it became the largest fund company in China within half a year. With the rapid expansion of Yu 'ebao, other Internet companies and financial institutions have also developed similar products, such as Tenpay, Baidu Baifa, Wealth Management of Huaxia Bank and cash treasure of Industrial and Commercial Bank of China. With the help of the Internet, the scale of money market funds in China has exceeded 1 trillion yuan, accounting for 1% of all deposits of banking financial institutions and 10% of bank wealth management products.
Yu 'ebao is a money market fund direct selling platform jointly sponsored by Alipay Network Technology Co., Ltd. (hereinafter referred to as Alipay Company) and Hotan Hong Fund Management Co., Ltd. (hereinafter referred to as Tian Hong Fund). It is the only sales channel of Zenglibao Fund managed by Tian Hong Fund. Alipay users with real-name authentication can transfer the balance of Alipay funds to Yu 'ebao, and quickly purchase the Zenglibao money market fund embedded in Yu 'ebao by Tian Hong Fund Company, thus obtaining higher income. At the same time, the assets in Yu 'ebao maintain a high liquidity, and customers can use it for online shopping and transfer it to Alipay or bank account at any time, without affecting customers' shopping activities.
The operation process of Yu 'ebao directly involves three subjects: Alipay, Tian Hong Fund and customers. Tian Hong Fund is a fund issuing, managing and selling organization, which issues Zenglibao Fund and sells it directly through Yu 'ebao. The customer is the subscriber of Zenglibao Fund, and the transfer of funds from Alipay account to Yu 'ebao is regarded as automatic purchase of fund shares; The transfer of Yu 'ebao funds to Alipay or direct consumption is regarded as fund share redemption. Yu 'ebao connects customers with Zenglibao Fund. According to the service agreement of Yu 'ebao, Alipay does not assume any liability for breach of contract for the transactions between customers and funds, but only provides a payment and settlement platform for fund transactions through Yu 'ebao. Zenglibao Fund operates the same as general money market funds except for custody and investment. It can be seen that Yu 'ebao has not created a new investment and financing relationship, nor is it a newly created financial product. It is essentially equivalent to Tianhong Zenglibao Fund.
There are three main reasons for the explosive growth of Yu 'ebao in less than a year.
First, high returns. By the end of February 20 14, the annualized rate of return of Yu 'ebao-Zenglibao Fund on the 7th was 6.03%, which was 15 times higher than the bank deposit rate and 273 basis points higher than the 1 year fixed deposit rate. At the end of 20 13, the annualized rate of return of Yu' ebao on the 7th was as high as 6.76%, which has declined since February, but basically remained above 5.5%, significantly higher than bank deposits and most bank wealth management products.
The second is high liquidity. Zenglibao Fund is an open money market fund that can be purchased and redeemed at any time. Yu 'ebao's platform strengthens this liquidity. The transferred funds are redemption funds, which can be paid to Alipay account in real time, and can be used for online consumption or transferred to bank cards at any time. There is no interest loss, and the liquidity is close to bank demand deposits, which is higher than most investment tools.
The third is the low threshold. The minimum amount for customers to purchase Zenglibao Fund through Yu 'ebao is only 1 yuan, which is the fund with the lowest requirements. In contrast, the subscription starting point of most securities investment funds is 1 ten thousand yuan, the subscription starting point of bank wealth management products is 50 thousand yuan, and the subscription starting point of fund trust products is 1 ten thousand yuan. Yu 'ebao enables more ordinary people to obtain financial services that were originally mainly for high-end customers in a fragmented way. At the end of February, more than 70% of Yu 'ebao users held less than 1 10,000 yuan.
Generally speaking, the profitability and liquidity of financial products are changing. Why does Yu Can's Yu 'ebao take care of both to a certain extent?
A prominent feature of Yu 'ebao-Zenglibao Fund is that most of the client funds raised are invested in bank deposits, accounting for about 95% at the end of February. According to China's current regulatory policy, this part of agreed deposits belongs to interbank deposits, which is different from the deposits of ordinary industrial and commercial enterprises and individuals in banks. There is no interest rate ceiling, and it is not subject to deposit reserve management. The interest rate of this part of the agreement deposit is negotiated and priced by the bank with reference to the interbank market interest rate, which usually far exceeds the general deposit interest rate, and most of them have signed the protection clause of no penalty interest for early withdrawal. For general unit or individual deposits, there is not only an interest rate ceiling that does not exceed the benchmark interest rate of 65,438+00%, but also a statutory deposit reserve. At the same time, the interest on time deposits can only be calculated on demand deposits in advance. This advantage of interbank deposits is particularly obvious when liquidity is tight. At the end of 20 13, the domestic 7-day interbank lending rate was as high as 8.84%, and the agreed deposit rate of Yu 'ebao's depository bank also rose.
The important reason why banks can pay higher interest rates on Yu 'ebao deposits is that the funds deposited in banks do not need to be deposited in the central bank. At present, the statutory deposit reserve ratio of large banks in China is 20.5%, and the statutory deposit reserve ratio of small and medium banks also reaches 17%. If you want to deposit reserves, even if there is no interest rate ceiling, it is difficult for banks to pay such a high interest rate for capital agreement deposits because of cost considerations. After all, the interest rate of around 6% is not only much higher than the deposit interest rate of each term, but even higher than some loan interest rates (the benchmark interest rate for loans within 6 months is only 5.6%, and the benchmark interest rate for 1 year loans is 6%). If we want to meet the liquidity demand of early withdrawal without penalty interest, it is even more unbearable for banks. Assuming that the agreed deposit of Yu 'ebao-Zenglibao Fund Investment Bank requires 20% reserve, according to the agreed deposit interest rate of 6% and the national unified statutory deposit reserve interest rate 1.62%, the annual cost of Yu 'ebao with a capital scale of 500 billion yuan will increase by about 4.2 billion yuan (5000 95% 20% (6%-1.62)
Of course, the convenience and efficiency brought by the Internet, Alipay's extensive customer base and other factors have also effectively reduced the operating cost of Yu 'ebao, but it is undeniable that the high income and high liquidity of fund assets are the main reasons for Yu 'ebao's strong appeal. Imagine, if the bank agreement deposits that account for more than 95% of Zenglibao Fund's assets only bear interest on general deposits (the highest deposit interest rate is only 0.385%) or there is a penalty interest on early withdrawal, Yu Can's Yu 'ebao will support a yield of more than 5% while ensuring redemption at any time? Obviously, it is impossible. Even with the help of advanced internet technology, it is impossible to cook without rice.
It can be seen that money market funds such as Yu 'ebao and Zenglibao can occupy high-yield and low-risk investment channels and have obvious advantages in the competition with bank deposits, because the money deposited by money market funds in banks and ordinary deposits are subject to different management policies.
Since 1970s, the United States began to study the reserve management of money market funds, and this policy was mentioned again after the international financial crisis. Although it has not been implemented, countries have generally attached importance to the risk management of money market funds. Judging from the nature of financial instruments, the liquidity of money market funds is close to bank deposits. In China, Yu 'ebao fund products invest most of their funds in bank agreement deposits, which makes them have the characteristics of deposits. Therefore, money market funds, like deposits, also face liquidity risks, involving money creation and other issues. The reserve management of money market funds can be based on the amount deposited in banks. This management mainly has the following policy effects.
The first is to deal with the liquidity risk brought by large-scale centralized redemption. Historically, the initial purpose of establishing deposit reserve system in various countries is to cope with the liquidity risk caused by large-scale squeeze and maintain the stability of the banking system. Although Yu 'ebao invests in highly liquid money market products, the average term is short, and the redemption behavior prediction and other coping mechanisms are established, the risk is relatively low, but the risk of large-scale centralized redemption cannot be completely ruled out. At present, Yu 'ebao deposits account for about 0.5% of the deposits of banking financial institutions. If a large-scale centralized redemption breaks out, it will have a great impact on Yu 'ebao and bank liquidity.
The second is to control money creation and improve the effectiveness of monetary policy. Another important function of the deposit reserve, which is also an important function of the modern national deposit reserve system, is to control the loanable funds scale of banks, thus controlling the money creation. Therefore, adjusting the deposit reserve ratio is an important tool of monetary policy in many countries, and China has also adjusted the statutory deposit reserve ratio many times to adjust the money supply. The increase of funds raised by Yu 'ebao means the decrease of general deposits in banks managed by reserves; The funds deposited by Yu 'ebao in the bank are not reserved. Theoretically, these funds can be derived infinitely, which can create money supply indefinitely and affect the effectiveness of monetary policy regulation.
The third is to ensure fair competition in the market and reduce regulatory arbitrage space. The theoretical basis of securities investment fund is to spread risks through investment portfolio and obtain relatively high return on investment on the basis of controllable risks. Because it is not managed by the deposit reserve, Yu 'ebao does not need to consider a complex investment portfolio, but invests 95% of its funds in bank deposits and enjoys risk-free income, and deposits in the name of the fund. Inter-bank deposits deposited by non-deposit institutions in deposit institutions are essentially deposits, and their contractual nature is the same as that of general deposits, so they should be supervised according to the principle of unification, and inter-bank deposits should also be paid into the statutory reserve like general deposits.
Fourth, more fund assets are invested in direct financing instruments to promote the perfection and development of financial markets. The essence of money market funds is direct investment and financing through the market. Therefore, in developed countries such as the United States, money market funds mainly invest in short-term bonds. In China, money market funds such as Yu 'ebao mainly invest in bank deposits, and the funds are not really disintermediated, which affects the efficiency of financial markets to some extent. If the deposit bank needs to deposit the reserve fund, the cost of Yu 'ebao will increase and the income will decrease, and it may invest more in direct financing tools such as short-term bonds, return to the essence of the fund, and promote the perfection and development of the financial market.
It should be pointed out that the implementation and function of China's deposit reserve policy are different from those of developed countries such as the United States. First, financial institutions in developed countries often solve liquidity problems through financial markets, and reserves have little effect in dealing with liquidity. However, China's financial market is underdeveloped, and the central bank's concentration of some funds through the deposit reserve system is still an important means to prevent the liquidity risk of financial institutions. Second, in most developed countries, money supply is no longer the intermediate goal of monetary policy, and the central bank mainly regulates prices through open market operations. For example, the Federal Reserve usually implements its monetary policy by adjusting the federal funds rate. M2, the broad money, is still the intermediate target of China's current monetary policy, and the statutory deposit reserve ratio is still one of the main monetary policy tools in China, and it is also an important means to adjust the money supply and social mobility and maintain the basic stability of prices. Third, the deposit reserve ratio in developed countries is very low, even zero, which has little impact on financial institutions and there is little room for regulatory arbitrage related to reserves. Money market funds mainly invest in bonds. For example, the European Central Bank's statutory deposit reserve ratio is only 2%, and the average statutory deposit reserve ratio in the United States is also low. At present, the statutory deposit reserve ratio in China is as high as 20%, so whether to deposit the reserve has a great influence on the capital cost of financial institutions.
Banks engaged in deposit and loan business are different from ordinary industrial and commercial enterprises. The operation of the former has a greater, more direct and wider impact on the stability and development of the economy and society. Therefore, banks and their businesses are often subject to stricter and special supervision by the state, and banks have to pay higher supervision costs for this, which is also a social obligation that banks, as special industries, have to bear. Paying low-interest or even interest-free deposit reserve is one of such obligations.
To sum up, in China, bank deposits invested by money market funds such as Yu 'ebao should be managed by deposit reserve. In addition, interbank deposits of other non-deposit financial institutions in banks are essentially the same as money market funds. According to the principle of unified supervision, the management of deposit reserve should also refer to the implementation of money market funds.
With the development of financial market, it is a natural process for money market funds to divert bank deposits. In the 1970s, the ratio of the total funds in American money market to the total deposits of deposit-taking financial institutions was only 1%. By the end of the 1990s, the proportion had exceeded 60%, and money market funds had formed an antagonistic trend with banks. Although China's money market funds started late, in recent years, the combination of Internet and finance has accelerated the process of diverting funds from deposits. The implementation of deposit reserve management for money market funds, including Yu 'ebao, will narrow the regulatory arbitrage space, make the financial market competition environment more fair and reasonable, and make the monetary policy transmission more effective.
Internet money market funds, such as Yu 'ebao, use the convenient and efficient technical features and strong penetration ability of the Internet to promote the marketization of traditional financial industries and help realize the concept of "inclusive finance". However, all financial businesses should follow the principle of unified supervision to ensure fair competition in the market, prevent and control financial risks, and realize the safe, stable and effective operation of the entire financial system.