I think today many people will analyze the policy interpretation of Mr. Liu yesterday, I read a round down and decided to interpret it myself, because few people have analyzed to the essence, as a researcher of political economy for nearly ten years, traditional financial macro-analyst, I have some of my own think.
First of all, the analysis of the policy should go back to the policy itself, and then analyze it word by word, because this policy document is personally issued by the Vice Premier in charge of finance, and not some other personnel, which shows how high its strength and importance. Because further up is only two levels can personally read the draft.
Here is our interpretation.
First of all, look at the nature of the meeting, it is the fifty-first meeting of the Finance Committee. First of all, the nature of the meeting is a regular meeting of the ministry in charge of finance, the nature is not particularly high, which means that the seriousness of this matter has not been escalated to the level of the State Council or above, which means that the nature of the meeting now is only to the important level of about 3-4. I think this is the reason why bitcoin has not really crashed.
So what is the main purpose of this meeting? As a policy document, the sequencing and wording determines the importance of its content and the level of implementation. The most important phrase is to start with “awareness of the big picture and stability”, which means that there is some instability in the financial system and now it needs to be “stabilized”.
Then what is the purpose of “stability”? Is the first policy “to further serve the real economy”.
And how to stabilize it? It is the later statement of “scientific and precise implementation of macro-control, grasp the degree, not to engage in sharp turns. To use a variety of monetary policy tools to maintain a reasonable abundance of liquidity, effective prevention and resolution of financial risks, and promote a virtuous economic and financial cycle.”
Can’t figure it out? So the back of the rules two or three inside the explanation, from which aspects to stabilize and prevent risks!
The first sentence of the second “resolutely prevent and control financial risks”, look at the policy document to see the degree of wording “resolutely” “prevent” and “control”, resolutely means that the task must be completed, must complete the task, “prevent” and “control” is to grasp both hands, the source and has run up to grasp, can be its strength of the great.
The second sentence with the words “adhere to the bottom line thinking”, that is, do not want to fuzzy treatment, this thing no one can cover up, the problem must be done, this is the bottom line, familiar with the ZC people will understand, which means who violated the bottom line problem, the results are the same, as the imperial sword general.
Then spoke carefully from which aspects to prevent and control risks.
(1) small and medium-sized financial institutions to reform the risk.
(2) efforts to reduce credit risk.
(3) Strengthen the supervision of financial activities of platform enterprises.
(4) Crackdown on bitcoin mining and trading; resolutely prevent individual risks from being transferred to the social sector
About the first three policies of detailed interpretation I believe we are not interested, then we simply read the first three policies out, its main purpose is what? It is to strengthen supervision to achieve stable results, in fact, its core purpose is to tighten credit to achieve the targeted tightening of monetary margins, the purpose of the targeted is not want the real economy to be affected. This means that the financial market has little opportunity in the short term, and the regulation of real estate capital inflows will be more stringent.
The second is to crack down on bitcoin mining and trading behavior, this is the issue that everyone is most concerned about; a lot of interpretations are to green mining, can’t use hydropower and thermal power mining, I can only say that maybe the top level doesn’t care what kind of energy you are mining, as long as it is not to the extent that it massively affects the achievement of the carbon neutral goal, I think the top level is not going to CARE about this thing. If it is to restrict the mining behavior, then it is good to say that restrict mining, why more “and trading behavior” it? Will there be more than one sentence of nonsense? This kind of document is written by the royal writers, but also constantly adjust and modify, never like me nonsense.
The core reason is still “stable”, “stable” financial! We need to learn to have a high degree of view of the problem “crackdown on bitcoin mining and trading behavior”, will have a destabilizing effect on the financial which links?
This kind of instability emerged on the day when the trading volume of Cryptocurrency was larger than that of Shanghai and Shenzhen markets. Perhaps the crypto circle had not attracted the attention of the senior management before, but this day came to gradually realize the harm it might bring. The wind will destroy the wood in the forest! Since that day, we have been warning about the risks before and after. So after the “crackdown on bitcoin mining and trading”, followed by another sentence “resolutely prevent individual risks from being passed to the social sector”, you used to speculate individually, I don’t care about you, but now the whole society is speculating, it’s not an individual problem anymore. Not an individual problem, I have to manage, because this is a social problem.
This is the core reason why cryptocurrencies are regulated, to prevent risks.
What are the other reasons? The problem of imported inflation from the release of the U.S. dollar, which is the third policy “to further promote the reform of the interest rate and exchange rate market, to maintain the basic stability of the RMB exchange rate at a reasonable equilibrium level” “to continue to expand the high level of financial openness.” What does that mean? If you are not a fan of policy analysis and macro analysis and analysts, it is difficult to understand what the meaning of this sentence is. Detailed nonsense will not say much, meaning that the exchange rate to be stable, why the exchange rate to be stable.
Many people want to say that this is a regular operation, because every time the Finance Committee meeting has this clause, indeed, but this time there is an additional imported inflation, that is to say, the inflation of the dollar printing has affected our exchange rate problems, resulting in our RMB forced to appreciate, so we need to control the stability of the exchange rate by various means, other links we have controlled, only one link is not good control, but also very difficult to control is “cryptocurrency, especially the control of BTC, is the biggest destabilizing factor”, so the ministry to control “bitcoin trading behavior”.
Well, it took a lot of effort to finally understand the whole thing, no need to panic, all kinds of regulation will certainly be on, but transparently accept the regulation, does not affect the stability of the financial system, the exchange rate fluctuations on a large scale, honestly will not put you in charge of death. So the meaning of the high level is very clear, we do not have to over panic, but do not expect to be able to let go in the short term, honestly wait for the general situation to stabilize, the old U.S. does not mess up, regulatory up, the market bull market will come.
This market top level also did not want to die, because its wording is “combat” not “resolute combat” what similar words, that they are also worried about the market to death.
So we cherish, other trend problems we do not analyze, or the previous strategy, there is a position rebound to reduce, no position rest all relaxed, good wait and see, and then patiently do things, proceed to the layout of things.
Wish everyone all the best! “Understand that the past is not admonished, know that the future can be pursued”!
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/a-detailed-analysis-of-last-nights-domestic-breaking-news-where-will-the-crypto-market-go/
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