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Lower RRR and lower interest rates.

Reducing the deposit reserve ratio means that the central bank (People's Bank of China) reduces the deposit reserve ratio and increases the amount of bank loans, thus increasing the total amount of money in the market. In order to prevent commercial banks from lending blindly and fail to ensure the safety of depositors, the central bank will require major banks to hand over some funds to the central bank for safekeeping according to a certain proportion. This part of the funds is called deposit reserve (also known as statutory deposit reserve), and the rest can be used for lending. The amount that banks can lend abroad is determined by the reserve and reserve ratio.

Deposit reserve/total deposit = deposit reserve ratio.

For example:

A Commercial banks have absorbed deposits of depositors 10000 yuan, of which 1000 yuan needs to be handed over to the central bank, so the deposit reserve ratio is1000/10000 =10%.

Or a commercial bank has absorbed depositors' 10000 deposits, and now the deposit reserve ratio is 10%, so the commercial bank needs to hand over 1000 yuan to the central bank, and the remaining 9000 yuan can enter the market in the form of lending, thus earning the difference. Now, if the cash reserve ratio is reduced to 9%, then Bank A only needs to pay 900 yuan's deposit reserve, and the remaining 965,438+000 yuan can be used for mortgage loans. Don't underestimate the extent of RRR reduction. Under the currency circulation of major banking systems, the investable funds in the market will increase by hundreds of billions or even trillions.

Interest rate reduction means that the central bank lowers the benchmark interest rate (including deposit benchmark interest rate and loan benchmark interest rate) by necessary means, thus changing the financial model of cash flow. When the benchmark deposit interest rate is lowered, the income of bank deposits will decrease accordingly, and depositors will tend to take money out of the bank for investment or consumption; When the benchmark loan interest rate is lowered, the borrowing cost of obtaining funds from banks will be reduced, and more funds will flow into the stock market.

Enterprises will also be more willing to borrow money to expand production, thus stimulating economic development. Generally speaking, interest rate cuts are good for both the stock market and the property market.

The difference between the two: reducing RRR can increase the amount of market funds, while lowering interest rates can not increase the amount of market funds, but only change people's capital investment. Some economists have compared this: lowering the standard is equivalent to adjusting the faucet gate to make more water flow out, and lowering the interest rate is equivalent to lowering the faucet position to make more water flow out.

Normal? Lower the standard? reduction of interest

Large flow? Rapid velocity

In short, RRR cuts and interest rate cuts are both loose monetary policies. When the market economy is in a downturn, the state will intervene in the market by reducing RRR and cutting interest rates, and strengthen the capital flow in the market, thus stimulating the economy and promoting prosperity.