Three years after China's central bank unveiled a new measure to calculate the amount of credit in the economy, it may be going back to the drawing board.
Pan Gongsheng, a vice governor at the People's Bank of China, said this week that the financial sector has rolled out so many innovative products in recent years that it has become much more difficult to calculate the nation's money supply.
The PBOC didn't name names, but recent financial innovations have included wealth management products and fast-growing online investment funds like Yu'e Bao -- all of them offering investors higher returns than traditional bank deposits.
Such innovations 'have affected the accuracy, completeness and scientific methodology of money-supply calculations,' Mr. Pan said Thursday at a meeting of financial regulators and academics. 'Hence we need to improve the financial calculation mechanism so as to better serve macro financial regulation and prevent systemic risks.'
Mr. Pan said regulators would set up a unified and comprehensive calculation system for the financial sector, but didn't give further details.
If this all sounds vaguely familiar -- well, it should.
Three years ago, unhappy with its existing tools for measuring domestic credit, the PBOC rolled out what it called total social financing, or TSF, trumpeted as a more representative measure than total bank loans or M2 (broad money supply).
The explanation for the change was a good one: Bank loans are no longer the overwhelming source of credit in China's financial system. Last year, they made up only about 51% of total new financing.
'In recent years our financial aggregates have expanded rapidly along with a diversification of financial institutions,' the PBOC said when it introduced the TSF measure. 'The number of financial products and financial tools has increased amid continuous innovation... There has been a marked upturn in off-balance sheet business, and that is replacing some of the role of bank loans.'
In addition to bank loans, TSF included newer categories such as trust lending, entrusted loans -- or credits between companies -- and bankers' acceptances, to name a few items.
Since its introduction, the TSF measure has faced plenty of controversy in academic circles. Debate has focused on whether the gauge covers enough of the nation's credit, whether it double-counts some components and whether it creates distorted data.
The central bank has defended its calculations, but that hasn't put the issue to rest. Thursday's comments from Mr. Pan seemed to indicate a change of heart at the PBOC.
Economists had mixed reactions to the bank's search for better monetary-measuring methods.
Financial consultant Nicholas Zhu, who works with regulators, smaller banks and the Asian Development Bank, said it's 'absolutely' the case that the PBOC's task is much harder than it used to be.
'What we are seeing is financial innovation' that's making the system far more complex, he said.
Mr. Zhu noted there's a lot of 'financing repackaging' -- or funds that move from one area of the financial system to another, such as through bank and trust company cooperation.
Jurgen Conrad, head of the economics unit at the Asian Development Bank's office in Beijing, said the total social financing gauge in its present form was of limited use.
'There are well known conceptual problems' with TSF, he said. The ADB looks at M2, he said, as well as separate financial segments such as entrusted loans and bankers' acceptances.
Another problem is that the central bank doesn't give a figure for the total stock of social financing, only the incremental portion. Economists say they can work backwards with the data, but often with disappointing results.
'Stock plus flow would be more valuable,' Mr. Conrad said.
The PBOC may be looking to add M3 data -- a broader measure of money supply that includes less liquid assets -- to its current mix. But even that wouldn't satisfy all critics.
'There's actually a need for a change in the way we make monetary policy, ' said Lu Zhengwei, an economist with Industrial Bank in Shanghai. 'We need another framework.'
Mr. Lu said the PBOC should target a key rate for its monetary management effort, much as the U.S. Federal Reserve does. Whether that's the overnight interbank rate or some longer-term rate doesn't matter.
But that would require progress on liberalizing interest rates, which are still partly controlled by the central bank.
'If we have a better measure,' but not a new framework, 'what's the point?' Mr. Lu asked.
与监管部门、中小银行和亚洲开发银行(Asian Development Bank)合作的金融顾问Nicholas Zhu说，这“绝对”是因为央行任务的难度比原先更大了。
鲁政委说，央行应当效仿美国联邦储备委员会(Federal Reserve, 简称：美联储)的做法，为其货币管理政策树立起一个至关重要的利率目标。这个关键利率目标是隔夜银行同业拆借利率还是某个更长期利率，这并不重要。