The head of the Central Bank of China undertakes to pursue a “vigorous” monetary policy to support economic recovery

The head of the People’s Bank of China (NSC) has pledged to take “vigorous” monetary policy measures to support the recovery of the Chinese economy.

“Since the beginning of the year, as a result of the pandemic, external shocks and other factors, the Chinese economy has faced some downward pressure,” said PBOC Governor Yi Gang (易 纲). statement made by the NSC on 27 June.

“Monetary policy will continue to operate in quantitative terms to support economic recovery.

“At the same time, we will also focus on the effective use of structured monetary policy instruments to support micro and small enterprises and green transformation.

“The inflation outlook in China is fairly stable, with annual CPI growth of 2.1% and CPI growth of 6.4%. Maintaining price stability and maximizing employment are at the heart of our work.

And stressed the success of interest rate regime marketing reform in China.

“Over the past ten years, the interest rate in the Chinese market has fallen amid stability, and the level of the natural interest rate is largely determined by marginal productivity of capital and long-term population growth trends,” he said.

“The central bank uses monetary policy instruments to target market interest rates, and now the fixed rate on deposits is about 1-2% and the rate on bank loans is about 4-5%.

“At the same time, the bond and stock markets are working quite efficiently, and given inflation, we see that the real interest rate is quite low and the financial markets are able to allocate resources efficiently.”

And also stressed efforts to stimulate the growth of green finance in China.

“As for monetary policy, the central bank’s most important duty is to maintain price stability … However, some central banks still have the opportunity to use structural monetary policy to accelerate green transformation,” he said.

“PBOC has done a great job to stimulate green transformation … in 2018, we included high-quality green bonds and loans in the amount of qualified collateral for medium-term lending facilities.

“Last year, we introduced two new monetary policy instruments – a carbon reduction tool and a loan to clean carbon professionals, with interest rates of 1.75%, to support qualified financial institutions in providing low-cost financing for projects with a pronounced effect. carbon reduction. ”

As of the end of May, the PBOC had allocated more than RMB 210 billion through two instruments, resulting in a reduction in CO2 emissions of approximately 60 million tons.

As of the end of March, China’s green loan balance exceeded 18 trillion yuan, while the balance of domestic green bonds was about 1.3 trillion yuan, ranking among the top in the world. The head of the Central Bank of China undertakes to pursue a “vigorous” monetary policy to support economic recovery

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