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Guan Tao, former director of the balance of payments Department of the State Administration of foreign exchange, wrote that if the central bank uses balance sheet management in combination with the adjustment of deposit reserve ratio and benchmark interest rate, it can further enrich the means of financial regulation and expand the space of monetary policy; in the neutral position of monetary policy, the central bank has the necessity and feasibility of "expanding the balance sheet".
Guan Tao, quoted by the first financial daily on Monday, pointed out that the operation of "expanding the table" is more flexible than reducing the standard and interest rates, but the signal effect of monetary stimulus is weak, which helps to avoid disturbing market expectations. The central bank can strengthen the coordination of fiscal, monetary and structural policies by optimizing the scope of collateral, adjusting the counterparties of the central bank, and innovating monetary policy tools, aiming at specific issues such as the issuance of local special bonds, capital supplement of commercial banks, support for enterprise debt equity financing, etc.
According to the article, the Central Bank of China is currently "downsizing" both in terms of absolute and relative scale. From the perspective of the liability side, it mainly shows a decrease in the investment of basic currency. In the first three quarters of 2019, it has accumulated a decrease of RMB 2.51 trillion, which is equivalent to 2.38 times the shrinking scale of the central bank's balance sheet in the same period. The effect of the counter cyclical adjustment of the central bank's monetary policy is partially offset by the "shrinking table".

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