MLF was founded by the People's Bank of China in September 20 14, which means that the central bank provides medium-term base money to the market through mortgages and commercial banks.
The duration of MLF is generally three months, but there are also six months or even one year. When the time is up, MLF will naturally expire. Simply put, MLF means that the central bank lends money to commercial banks, and then commercial banks lend money to enterprises that need funds, which can provide liquidity for the market, reduce the interest rate of commercial banks' external loans and reduce the financing costs of enterprises. Generally speaking, it has a positive effect on the development and growth of enterprises.
2. Does the expiration of 2.MLF affect the stock market? Is it big?
The operation of MLF is similar to reverse repurchase, except that reverse repurchase takes a shorter time, while MLF takes a longer time. In theory, MLF is good news for the stock market, because it can reduce the financing cost of enterprises.
The sequel of MLF of the central bank is to hedge the expired MLF. Judging from the term of MLF, the central bank exchanged six-month MLF and 1 year MLF for three-month MLF and seven-day and 14-day reverse repurchase. In the case of stable market funds, monetary policy will shorten the real estate, which is the same as the purpose of restarting after 14 days. Of course, the result of this is to increase the capital cost of the market.
But MLF is of little use to ordinary stock investors because they don't need it either. However, for the stock market, it will still have a certain impact. Because, no matter what decision the central bank makes, it can cause the stock market to rise and fall, which has a great influence. Therefore, even an ordinary investor should always pay attention to the current economic situation and the trend of national policies. In this way, when MLF expires, we can know whether its impact on the stock market should make us more cautious.
Third, the difference between MLF and reverse repurchase
1. Different distribution methods:
MLF is mainly a pledge loan. It means that commercial banks borrow large amounts of money from the People's Bank with bonds such as national debt, financial debt and senior credit debt as collateral.
Reverse repurchase mainly means that the People's Bank of China buys securities from Shenzhen Stock Exchange and Shanghai Stock Exchange and then sells them to these exchanges after a certain period of time.
2. Different operation modes:
MLF is mainly conducted through external bidding of the exchange, and the bidding targets are mainly commercial banks, monetary funds and investment companies.
Reverse repurchase mainly means that the People's Bank of China lends money to commercial banks, and commercial banks use their own high-quality bonds as collateral to the People's Bank of China.
3. Different time periods:
MLF is issued for a long time, generally ranging from three months to six months.
Reverse repurchase is mainly a short-term behavior, generally not more than seven days.
4. Different purposes:
MLF is mainly to reduce the financing cost of SMEs, play the role of policy interest rate, and guide the national policy funds to flow to the real economy sector.
Reverse repurchase is mainly an investment behavior made by the People's Bank of China to revitalize the securities market. During the stock downturn, it can bring confidence to the stock market, thus stabilizing the entire financial order.