In fact, the central bank's debt repayment behavior is to repay the RMB printed by the central bank when the enterprise purchases foreign exchange with RMB or the government repurchases bonds. Simply understood, it is to "cancel" the originally issued currency. This behavior is called "balance sheet reduction". The reduction of the central bank's balance sheet directly refers to the deleveraging of the housing market and the financial system. Therefore, the rhythm of this round of shrinking tables will greatly affect the real estate market. Although it is difficult for the stock market to be immune in the short term, cracking down on various institutional arbitrage will ultimately benefit the long-term development of the stock market.

Reducing the table means' releasing long-term high-quality assets+recovering speculative funds'. Shrinking the table is a more severe tightening policy, and the effect of Chinese-style shrinking the table is even more fierce than raising interest rates. Shrinking the table can be said to be another form, a specific and small interest rate hike. Compared with raising interest rates to raise capital costs and curb lending activities, "shrinking the table" is equivalent to directly withdrawing the base currency from the market, which has a greater impact on liquidity. Therefore, shrinking the table is theoretically beneficial to the dollar and unfavorable to gold.

1, Review of Table Reduction of Bank of China

Bank of China experienced two price drops: the first time was from 20 1 1 year 1 1 month to 2065438+February; The second time was from March 20 15 to February 2 12. Specifically, the duration of the contraction of the first watch is short and the amplitude is not large. In four months, the total assets of the central bank decreased by about 250 billion. The second contraction is a very typical contraction. During the nine months from March 20 15 to February 20 12, the total assets of the central bank fell by more than 2.7 trillion yuan.

2. The Bank of China contracted ≠ the United States contracted.

Historically, the contraction of the Bank of China is not a tool of monetary policy (which is completely different from the quantitative easing policy of the United States), and the expansion and contraction of the balance sheet of the Bank of China is not determined by the orientation of monetary policy.

(1) In history, when the Bank of China reduced its balance sheet, the corresponding monetary policy was loose.

The first and second table contraction corresponds to the reduction of the statutory deposit reserve ratio by the central bank. And in the second period, the central bank cut interest rates five times in a row.

(2) Historically, the cycle of raising interest rates has not been accompanied by the contraction of the central bank.

March-65438+February and 2010-2010-July 20 1 1 in 2007 are two typical monetary tightening cycles in the history of China. During these two periods, we have not observed the contraction of the balance sheet of the Bank of China, either in absolute amount or in year-on-year growth rate. What is even more surprising is that these two interest rate hike cycles correspond to the rapid expansion of the central bank's balance sheet.