The Central Economic Work Conference held recently required that we should maintain reasonable and sufficient liquidity and guide financial institutions to increase support for small and micro enterprises, scientific and technological innovation, green development and other fields. Among them, reducing the deposit reserve ratio is a conventional means to meet the medium - and long-term liquidity needs of monetary and credit growth. The second comprehensive RRR reduction in the year has been implemented recently. In addition to the first RRR reduction in April this year, the two RRR reductions have reduced the deposit reserve ratio of financial institutions by 0.5 percentage points, released more than one trillion yuan of long-term funds, and reduced the weighted average deposit reserve ratio of financial institutions to about 7.8%. Experts believe that the timely and appropriate reduction of RRR reflects the forward-looking nature of monetary policy, which is conducive to stabilizing market expectations and enhancing market confidence. The relevant person in charge of the People's Bank of China said that the RRR reduction has the following three functions: first, to maintain a reasonable and sufficient liquidity, to maintain a reasonable growth in the total amount of money and credit, to implement a package of policies and measures to stabilize the economy, to increase support for the real economy, and to support the effective improvement of economic quality and reasonable growth in quantity. Second, optimize the capital structure of financial institutions, increase the long-term stable capital sources of financial institutions, enhance the capital allocation capacity of financial institutions, and support industries and small, medium and micro enterprises seriously affected by the epidemic. Third, this RRR reduction reduces the capital cost of financial institutions by about 5.6 billion yuan per year, which can promote the reduction of the comprehensive financing cost of the real economy through the transmission of financial institutions. In the opinion of experts, one of the main signals of the central bank's RRR reduction is to provide an appropriate liquidity environment for stable growth, credit extension and cost reduction. "The capital released by the RRR reduction has no cost and maturity, which provides a long-term, cost free source of capital for financial institutions, helps improve the credit delivery capacity of financial institutions, and provides sufficient medium and long-term credit support for enterprises." Liang Si, a researcher at the Bank of China Research Institute, said that since the capital released by the RRR reduction has no interest cost, it can help financial institutions ease their financial burden, which will also be transmitted to the real economy and simultaneously reduce the interest cost of enterprises. According to the financial statistics of the People's Bank of China, since the third quarter, the medium and long-term credit demand of enterprises has kept increasing year on year. Even though the overall performance of the financial data in October was weak, the medium and long-term loans of enterprises (institutions) still increased by 462.3 billion yuan, an increase of 243.3 billion yuan over the same period last year, continuing the good momentum since August, which means that the demand for medium and long-term funds of enterprises is continuing to recover. The previous report on the implementation of China's monetary policy in the third quarter of 2022 issued by the People's Bank of China also proposed that commercial banks would be guided to expand medium - and long-term loans. Wen Bin, the chief economist of China Minsheng Bank, also believes that behind the RRR reduction is still weak fundamentals and the need for a series of stable growth policies before the end of the year. "Considering that the economy in the fourth quarter played the most important role in the whole year, which is the key point to consolidate the economic recovery, we need the strength of monetary policy to stabilize growth and boost confidence." Wen Bin said that when the current price and exchange rate pressures are easing in stages, the primary objective of monetary policy should be adjusted in a timely manner. It is of great significance to stabilize growth and ensure employment by reducing reserve ratio to maintain reasonable and sufficient liquidity and support the development of credit. Total release of this RRR reduction