Idle funds

Idle funds

Idle funds refer to the flow of funds among multiple institutions in the financial system, without or at least without direct flow into the real economy.

"There is no idling of funds, but the link of financing has been lengthened". The mainstream argument is "financial services to the real economy". Therefore, as long as funds do not flow directly from financial institutions to the "real economy", then the link before the last flow to the real economy is regarded as "idle capital".

For example, demand deposits are kept in the bank, and the interest rate is .35%. But if you take it out and deposit it in Yu 'ebao, Yu 'ebao will make your money into an agreement deposit and deposit it in the bank, and your yield will be 4 to 5 percentage points. For banks, the funds are still those funds, but the cost has increased by more than ten times.

for another example, the one-year bank loan interest rate is 6%, but many local government financing platforms and real estate enterprises that need funds have to lend money through bank-trust cooperation and bank-securities cooperation. During this period, from one bank to another, then to the trust, and then to the entity, every link in the middle will charge a credit fee of half a point to one point, "pushing up the cost of capital".

manifestations of capital idling

Usually, capital idling is manifested in the following forms.

1. Interbank certificates of deposit and interbank financial products

Big banks have sufficient funds, but their risk appetite is low. In the economic downturn, the potential risks brought by bank lending are higher than those brought by interbank deposit certificates and interbank financing. In order to control the risk, the big bank made a small move to obtain funds, and the two hit it off to form an idle fund.

for example, during the epidemic period, the central bank released water to the six major state-owned banks, and the six major banks may not lend all of them immediately, but it is impossible for them to sleep with a lot of money. So they lent money to city commercial banks or rural commercial banks at low interest rates. Since the big bank knew the risks, so did the small bank. So the small bank brought funds to buy wealth management products with higher income than the cost, thus forming idle funds.

2. Bank outsourcing

Bank outsourcing refers to the fact that banks entrust their own or off-balance-sheet and on-balance-sheet wealth management funds to non-bank institutions for management, instead of directly transferring the information of capital banks to bonds or credits and flowing them into the real economy.

For example, many special funds, priority funds in the leveraged bull market in 215, etc.

3. Invest in nonstandard assets

Banks invest in nonstandard, equity, real estate and other restricted areas through trust plans and asset management plans, so as to achieve the effects of evading supervision and limiting investment scope, reducing the provision of venture capital and bypassing loan-to-deposit ratio and other regulatory indicators.