Central Bank pledges continued stable monetary policy

World
Europe

China will continue implementing prudent and neutral monetary policy to create a neutral and moderate financial environment for supply-side structural reform, the country's central bank said Friday.

The People's Bank of China (PBOC) will combine price-based and quantitative monetary tools as well as macro-prudential policies to fine-tune liquidity conditions, according to the quarterly report released by the PBOC.

Developing direct financing will be prioritized, and indirect financing structure improved.

More financial support will be given to small and medium-sized enterprises, rural and remote areas, agriculture and farmers, the report said, adding that green finance is encouraged.

AFP Photo

The modernization of the payment system has significantly reduced the time required for payment settlement and lowered the costs for banks to transfer assets to excess reserves, the PBOC said in its second-quarter monetary policy implementation report.

The PBOC will also play a more active role in guarding against systemic financial risks.

The report stressed the deleveraging of Chinese state-owned enterprises as the top priority and called for stepping up efforts to resolve the so-called “zombie” firms, debt-ridden and loss-making companies that continue to operate only with the support of local government funding.

The central bank also emphasized the priority of keeping the yuan stable. The Chinese currency has strengthened this year, rising more than 4 percent against the US dollar as of Friday and reversing a depreciation trend since August 2015.

14km