Core Viewpoint - The regulatory authority has implemented new rules to control high-interest interbank demand deposits, aiming to reduce the scale of such deposits and improve the efficiency of monetary policy transmission [4][12][15]. Summary by Sections Regulatory Changes - Starting from March 16, banks are required to limit the scale of interbank demand deposits with interest rates exceeding 1.40% to 10%-20% of their total interbank deposits [3][6]. - In the first half of last year, high-interest interbank demand deposits amounted to approximately 11.69 trillion yuan, accounting for 44.44% of total interbank deposits [3][7]. Impact on Banks - Banks are taking measures to comply with the new regulations, including suspending the issuance of high-interest interbank demand deposits and negotiating to lower rates below 1.40% [6][8]. - The average interest rate for deposits at banks was 1.47%, while the rate for high-interest interbank demand deposits was around 2.025% [13]. Benefits for Large State-Owned Banks - The reduction in high-interest interbank demand deposits is expected to benefit large state-owned banks and joint-stock banks, with their overall funding costs decreasing by 0.75 and 0.98 basis points, respectively [7][12]. - If the proportion of high-interest interbank demand deposits falls below 10%, net interest margins for these banks could increase by 0.69 and 0.95 basis points [7]. Market Reactions - Investment managers are actively seeking alternative fixed-income products to replace high-interest interbank demand deposits, as the new regulations create downward pressure on yields [2][3][19]. - The anticipated decline in interbank demand deposit rates may lead to a broader decrease in market interest rates, affecting the yields of other financial products [19][20]. Asset Management Challenges - Cash management products are facing pressure to maintain yields above their performance benchmarks, which are currently tied to the central bank's 7-day notice deposit rate [17][19]. - The expected decline in high-interest interbank demand deposits could lead to a significant drop in overall yields for cash management products, with estimates suggesting a decrease of 1.47 basis points if rates fall from 1.60% to 1.40% [18][19].