The curtain rises on the trillion-dollar debt-to-equity swap, and many banks are calling for the 'full and effective use of debt-to-equity swap policy'.

Jinshi Data News on November 18th, the 10 trillion yuan scale to support local debt issuance is the largest debt conversion policy in recent years. This round of fiscal stimulus, which is centered on the issuance of ultra-long-term national bonds, is different from the fiscal policy in 2008 that supported credit expansion on a large scale. The latter to some extent stimulated the rapid rise of the shadow banking sector, while the former may have a positive impact on multiple indicators and long-term development of the current banks. Bankers told reporters that the biggest effect of this debt conversion plan is to improve the market’s concerns about the exposure of hidden debts. The replacement policy transforms the original hidden debts at the local level into statutory debts, which lowers the interest rate on the debts, eases the debt repayment pressure on local finances, and further avoids the potential risks of commercial banks, enabling the banking industry to maintain a stable state. In general, government debt conversion reduces various risks for banks, unleashes the ability of banks to serve the real economy, and has a positive impact on the expansion of banking business and the improvement of asset quality.