China’s central bank pledged on Wednesday a targeted and prudent monetary policy, keeping liquidity basically stable while being vigilant to risks.
The People’s Bank of China (PBOC) said in a statement on its website that it will maintain financial stability and continue to implement an “opening up and reform” policy.
The PBOC will also improve the yuan’s exchange rate formation mechanism and keep the yuan basically stable at a reasonable and balanced level, it said.
So far, the PBOC has not made any large-scale moves to tighten liquidity, using instead targeted and smaller measures.
“Overall, we expect the PBOC to continue to pursue a prudent and targeted monetary policy in order to contain systemic risks, while also keeping liquidity relatively stable,” ANZ economists said in a research note.
The People’s Bank of China would maintain financial stability
China’s central bank Governor Zhou Xiaochuan pledged a targeted and prudent policy on Sunday, amid concerns over debt and bubbles in the world’s second-largest economy.
Zhou, in an article in the Financial Times, said the People’s Bank of China would maintain financial stability while promoting sustainable growth.
“We will maintain financial stability and promote sustainable growth by implementing a targeted and prudent monetary policy,” Zhou wrote.
He also said the central bank would “actively” guard against systemic financial risks.
The comments come after a series of moves by the Chinese authorities to tighten regulation of the country’s $30 trillion economy, including a crackdown on debt and risky lending.
The article also comes ahead of next week’s annual meeting of China’s parliament, the National People’s Congress, where regulators are expected to announce new measures to curb risk.
Debt has emerged as one of the biggest risks to the Chinese economy, with total debt reaching almost three times GDP.
Analysts have warned that a sharp slowdown in China could infect the global economy.
In his article, Zhou said the Chinese authorities were “mindful of the risks” and were taking steps to address them.
“We recognise that there are risks and that we must address them head-on. Our aim is to foster a stable and healthy financial system that supports sustainable growth,” Zhou wrote.
The article discusses the recent statement by the People’s Bank of China that it will pursue a targeted and prudent monetary policy in order to promote stable and healthy economic growth. The bank pledged to keep liquidity at a reasonable level and avoid excessive monetary easing. This appears to be an attempt to keep a lid on risks stemming from the country’s rapid growth and indebtedness.