For more than a month before the Chinese New Year, the Communist Party of China (CPC) has issued a ban on bank deposit products, one after another calling a halt to promotional products previously launched by banks to ease the pressure of declining deposits, especially those with flexible drawdown and interest settlement.
According to mainland media on Feb. 9, Bank of Communications stopped all monthly interest-paying deposit products from Feb. 6; a branch of ICBC in Shanghai also received notice from the branch that it would stop selling monthly interest-paying large certificates of deposit in the near future.
Bank of Communications responded to Interface News that the bank is adjusting its periodic interest-paying deposit products according to regulatory requirements. The “periodic interest payment” refers to the interest payment cycle agreed between the bank and the customer, which is divided into “monthly interest”, “quarterly interest” and “annual interest The interest settlement methods are “monthly”, “quarterly” and “annual”.
Previously, on February 8, the Central Bank of the Communist Party of China (CBC) for the first Time qualified “periodic interest payment” deposit products as “illegal products”. The same product was also qualified as “non-compliant”, which was stopped at the end of last year.
In its Feb. 8 “Report on the Implementation of China’s Monetary Policy in the Fourth Quarter of 2020,” the Central Bank of the Communist Party of China said that “the effective interest rates on demand deposits, time deposits withdrawn in advance on a slot basis and periodic interest payments are higher than the interest rates on deposits of the same maturity,” adding that these deposit products violate the “rule that time deposits are withdrawn in advance on a slot basis. These deposit products violate the regulations of “time deposits with interest accrued on demand for early withdrawal and time deposits with principal and interest paid at maturity”.
On December 14, 2020, the Chinese Communist Party asked the six major state-owned banks (ICBC, Nongguan, Zhongguo, Jianjian, Jiaotong, and Post and Reserve) to collectively stop The “relying on file” interest rate.
In addition to the ban on “slotting” and “periodic interest payments,” the CCP has also issued bans on deposit products from Internet financial platforms and “off-site deposits” from local banks in the last month.
On January 15, 2021, the CPC CBRC and the Central Bank issued a notice stating that commercial banks are not allowed to carry out time deposits and fixed-income deposits through non-self-operated online platforms. Subsequently, internet platforms such as Alipay, Tencent Wealth Management, Jingdong Finance, and Du Xiaoman Finance have taken down their deposit products.
A week later the Central Bank of the Communist Party of China said that non-bank payment institutions will deposit all their provision funds centrally with the central bank or specific commercial banks. This means that the funds of depositors who have made deposits on Internet platforms will be “centrally managed” by the CPC.
On Feb. 4, the central bank of the Communist Party of China again requested local legal person banks not to conduct “off-site deposit” business through third-party Internet platforms, including their own online banking and mobile banking, in places where they do not have physical branches.
These frequent moves by the Chinese Communist Party against bank deposits have aroused concern, and some netizens have pointed out that “the Communist Party is short of money”.
In recent years, the savings of the mainland people have been decreasing year by year, only according to the data of Sohu.com in November 2020, the savings rate of the mainland is the lowest in history, 560 million people have no savings, high prices, high mortgage and car purchase factors have made the mainland from the “big savings country” to “big debt country High prices, high mortgages and car purchases have turned the mainland from a “savings nation” to a “debt nation.
This year, in addition to keeping a close eye on bank deposits, the Chinese Communist Party also changed its previous practice of releasing liquidity on a large scale before the Chinese New Year, and the reverse repo (the central bank’s injection of funds into the market) was significantly scaled down this year.
On Jan. 21 and 22 before the 2020 New Year, the CCP’s central bank conducted 100 billion yuan and 30 billion yuan of 14-day reverse repo, respectively.
However, from February 8 to 10 before this year, the CCP central bank conducted 7-day reverse repo of 110 billion yuan, 50 billion yuan and 20 billion yuan respectively. The official explanation for this is that “there is no need for additional large-scale stimulation” and “the demand for funds such as cash withdrawals by residents has dropped”.
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