The people's Bank of China has been promoting the market-oriented reform of interest rate. With the continuous release of the dividend of the quoted interest rate reform in the loan market, the loan interest rate of the real economy has decreased steadily. In this article, we sort out the background, process and contingent impact of interest rate marketization in Japan on the financial system.
The background of interest rate marketization in Japan: from interest rate control after World War II to the elastic demand of the financial system in the 1970s.
During World War II, in order to deal with external constraints and inflationary pressure, Japan adopted a series of capital and financial controls. After the war, Japan continued strict financial control, and even began to implement "window guidance" on bank credit behavior in 1957. From 1955 to 1973, the increasing trade surplus pushed up foreign reserves. Under the background of lack of hedging tools, the liquidity environment in Japan and China was too loose. In addition, in response to the first oil shock, the Japanese government led a large amount of investment, leading to a rise in the government debt ratio. In this context, Japan needs a more flexible financial system. With the development of financial liberalization, the financing methods of Japanese enterprises tend to be diversified, and Japan began to guide the market interest rate through open market operation. However, if we want to improve the effectiveness of policy interest rates, we need to establish the corresponding market interest rate transmission mechanism, so that the changes of short-term interest rates in the inter-bank market can effectively transmit other interest rates. Deregulation of various interest rates is the first step.
The process of interest rate marketization in Japan: from 1977 to 1994, Japan completed the interest rate marketization reform in 15 years.
In 1977, commercial banks were allowed to purchase treasury bonds for listing and circulation, and the marketization of medium-term treasury bond interest rate and inter-bank bill interest rate was completed within two years. In 1985, the money market certificate of deposit was launched and the process of bank deposit marketization began. The marketization of loan interest rate was completed in 1991, and the Bank of Japan stopped guiding the window of commercial banks. Two years later, Japan completed the marketization of time deposit interest rate. Finally, in 1994, Japan completed the market-oriented reform of interest rate.
Experience and lessons of interest rate marketization in Japan: interest rate marketization should pay attention to the profitability of the banking system, accompanied by the optimization of credit structure, so as to prevent excessive concentration of credit in the real estate field.
After opening the process of financial liberalization, the proportion of real estate loans of Japanese commercial banks has been rising, and the proportion of manufacturing loans has declined rapidly. This will not only promote the real estate bubble, but also foreshadow the future crisis. After the Plaza Accord, the sharp appreciation of the yen and the continuous reduction of interest rates further exacerbated the overheating of real estate and financial assets. The Bank of Japan began to raise interest rates in 1989. However, under the background of interest rate marketization, the interest rate increase directly led to the rapid decline of the profitability of the Bank of Japan. Economic growth slowed down, stock and real estate prices fell sharply, the quality of loans deteriorated rapidly, the economic crisis weakened the debtor's ability to repay loans, the value of collateral shrank, and the value of equity held by banks declined. Japan began to experience an unprecedented financial crisis.
The Japanese case gives China three enlightenment in the interest rate marketization: 1) the interest rate marketization needs a loose policy environment in order to have a minimum impact on the financial system; 2) From the perspective of the affordability of banks, since 2018, the cost of bank liabilities has decreased, driving the recovery of bank interest margin, and it is possible to appropriately reduce the loan interest rate; 3) Through the MPA assessment mechanism and structural monetary policy tools, the people's Bank of China guided the flow of financial resources to manufacturing, green, high-tech, agriculture, rural areas and farmers, small and micro enterprises and other industries, while the proportion of real estate investment gradually decreased.
Risk tip: insufficient understanding of the Bank of Japan's monetary policy.
