Some people are just too shrewd. As soon as they encounter trouble, they rush to seek help from the government. But when the country needs their support, they come up with all sorts of excuses to evade responsibility, and even engage in petty tricks. This is just like those spoiled children who act cute when they want candy, and throw tantrums when they don't get it.

The People's Bank of China did not originally plan to adjust policies so frequently. Their wish was to stimulate the economy by lowering interest rates. However, the current situation is that government bonds are being snapped up, resulting in market interest rates rising instead of falling, which has left bankers in a great deal of distress.

As for those financial companies, they feel quite wronged. There are not many good investment opportunities in the market now. Although the returns on government bonds are not high, they are better than those with high risks. Now they are blaming the government for interfering in the market, thinking that the government should not do so.

In fact, these financial companies have their own ulterior motives: they know that once the government intervenes in the market, they will have the opportunity to make a profit. They may even collude in secret, making money on the sly. Especially when they hear that the government is going to take action, they are even more bold, because even if they are caught, they will only be scolded or fined, which is nothing to them.

Advertisement

However, this insatiable behavior has ultimately ignited the anger of the regulatory authorities.

On August 7th, the National Association of Financial Market Institutional Investors announced that it would investigate four rural commercial banks. Although it is said to be a self-inspection, the issues involved are not small, such as market manipulation and internal interest exchanges. This is similar to the case of Xu Xiang in the past, who was eventually punished by the law for doing bad things. The misdeeds of these four banks may be even more serious than Xu Xiang's, because they are not only disrupting the market but also acting recklessly in such an important area as national financial security.

01

The central bank has put a lot of effort into this, saying all the good words, but some people just listen and forget. Since the beginning of the year, the central bank has been busy reminding everyone to be vigilant about risks through various channels, such as media statements and internal communication. In June, President Pan pointed out the direction of future monetary policy at a high-level meeting, emphasizing the importance of government bonds. But those financial institutions seem to have heard it, and then turned a deaf ear.

Seeing that this approach was not effective, the central bank had to take a tough stance in July, adopting measures such as "selling debt," and continuously releasing news on domestic and foreign media for a week, as if drawing a warning line in the market, and showing firepower, indicating that anyone who dares to cross the line will be fired upon.Such an obvious warning only kept those institutions quiet for a few days, but soon they went back to their old ways, as if they were betting that the central bank wouldn't really take a hard stance. However, they miscalculated, as the central bank was truly out of patience this time.

On August 5th, the central bank decided to take some practical action. The news spread that there would be a large sale of 10-year government bonds in the afternoon, with the aim of pulling the yield back to a reasonable level. This was not a small move; on Monday alone, large commercial banks and policy banks sold more than 20 billion yuan worth of government bonds, more than four times the amount of the previous Friday.

The central bank guided these large banks to sell government bonds, actually for the stability of the market, to allow the yield to reasonably rebound. However, some institutions actually dared to stand up and sing counter to the central bank, which was not a small courage.

Don't forget, the bond market is a "familiar market", everyone basically knows each other, and they are all qualified participants in the interbank market, and there are only so many people nationwide. The central bank used to be very friendly, also because everyone in this market is familiar, and everyone is familiar with each other.

The central bank has already made it clear, and it is also related to the national financial security and economic development. These institutions still dare not to take it seriously, which is really puzzling. Moreover, the financial system is currently being strictly investigated and managed, and many senior executives have been investigated, which is enough to show the seriousness of the problem. Therefore, these institutions should really wake up, stop testing the patience of the central bank, and cooperate with the policy to contribute to the national financial security and economic development.

02

Seeing the current situation, it really reminds people of the sudden attack by India in 1962. At that time, our country maintained great restraint, and India may have mistakenly thought that we were easy to talk to, and as a result, the flames of war burned to their doorstep.

This time, our central bank took action for the first time to save the market, but financial institutions gave the central bank a down horse, and it seems that they were well prepared and understood the central bank's routine. The central bank thought that these financial institutions would consider the overall situation, but their greed exceeded expectations.

In this contest, the central bank used a big move, and on Monday, the four major banks sold 20 billion yuan worth of 10-year government bonds, and also sold some 30-year ones, but these bonds were snatched up by rural financial institutions. Especially on Tuesday, the central bank continued to sell a large number of government bonds to stabilize the market, but the rural commercial banks bought more fiercely, 60% more than what the central bank sold, which was obviously planned.

The original idea of the central bank was simple and crude, to sell a kind of bond in a concentrated way, and to adjust the market quickly. But this move was seen through by others, so the central bank had to change its strategy, and on Wednesday, it came up with a new strategy.Firstly, the central bank has stopped playing with a single variety and has switched to 7-year government bonds. Because the market size of the 7-year period is small, the same effort has a greater impact on the market, making it easier to move the yield to achieve the effect of saving the market. Moreover, the central bank also uses the previously purchased 7-year bonds as a backing to ensure there is enough capital for operation.

Then, the National Association of Financial Market Institutional Investors in China quickly issued an investigation order, directly naming the four rural commercial banks in southern Jiangsu, including one in Changzhou and three in Suzhou, which is a direct blow to their unregulated behavior. Our central bank is really serious this time.

03

On August 8, the article "Strict Investigation! Targeting Treasury Bond Trading Violations" published on the Financial Times WeChat public account, clearly stated the problem.

The article not only mentioned that the rural commercial banks in southern Jiangsu were thoroughly investigated, but also criticized their behavior of "making small moves, manipulating market prices, and transferring benefits behind the scenes". These four banks are all in Jiangsu, and the article specifically pointed out, as if to say: "You are all from the same place, you do this, it is really embarrassing!"

Especially Changshu Rural Commercial Bank, this bank has a certain background, it is one of the earliest batch of shareholding rural financial institutions in the country, and the purchase and sale of government bonds are also among the best. Suzhou, Jiangnan, and Kunshan Rural Commercial Banks are also not easy to deal with. The central bank and the state used to praise them a lot and gave them a lot of benefits. But now the country needs them to stabilize the market, they are good, but they make the market more chaotic.

The article also exposed a new method of cheating, some financial institutions collude inside and outside, using market expectations to make trouble. It also mentioned how badly the stock price of Changshu Rural Commercial Bank fell, which is to tell everyone that if you go against the country, you will suffer in the end. They may want to make some quick money by buying and selling government bonds, but now it's not only the money is gone, but the license may not be guaranteed.

This article is not only about some facts, but also a reminder to all financial institutions to have self-knowledge and abide by the rules. Otherwise, those who think they are smart tricks will only fall into a big pit. Money is endless, some money is really not touchable, touching is to find trouble for oneself.

This article is like a warning shot from the central bank, hoping that those who are not obedient can quickly return to the right path. Sometimes, it is not enough to just say good words, but also to have means to ensure the order of the financial market.