A visual understanding of the surplus savings system in the monetary system, a comprehensive analysis of central bank monetary policy tools!

For those who want to understand central bank monetary policy,

remember the core formula: △Excess Reserves = △Foreign Exchange Reserves + △Claims on Other Deposit-taking Institutions - △Currency Issuance - △Required Reserves - △Government Deposits. Around this, the central bank's toolkit directly manages liquidity!

Traditional + Innovation, a dual-track approach to controlling liquidity.

Traditional OMO: Reverse repos to inject liquidity, adjusting short-term interest rates, and reverse repos to withdraw liquidity (less used after 2014), the foundation of foundations.

Innovative tools: SLF (Emergency Lifeline), MLF (Anchoring Medium-term Interest Rates), TMLF/PSL, etc., precisely covering different terms and entities, directing “drip irrigation” to the market.

The policy logic in the flow of funds:

Foreign exchange reserves, central bank injections (public + non-public), government deposits are interconnected, treasury time deposits lock fiscal funds, stabilize interbank liquidity… Understanding this system is the key to the central bank's regulation of “stabilizing interest rates and adjusting liquidity,” allowing everyone to grasp it immediately without confusion!