MNI POLICY: China to Further Yuan Internalization: Yi

China will continue to promote the internationalisation of the yuan and open up the capital account as the currency shows "good momentum" with surging cross-border yuan transactions and gains in its acceptance as a reserve currency, People's Bank of China Governor Yi Gang told the People's Daily in an interview published on Monday.

China's macroleverage may rise this year given the increase in loans and debt and slower GDP, Yi told the Daily. The economy faces issues such as lagging consumption, a reduction in disposable incomes, investments slowed by global downturn, weak demand and higher unemployment, Yi said. However, whole-year growth may still be positive as the recovery extends in H2, he said.

China will further direct flexible monetary policy to support targeted areas, including SMEs, to stabilise businesses and protect employment, Yi said. He said it would also use multiple tools to guide money supplies and aggregate financing to expand "markedly" faster than last year. China would also enhance mechanisms for managing large financial risks and normalise risk preventions and disposals.

Yi reiterated China's plans to open up, with measures such as lifting foreign share ownership limits in areas such as securities as it pushes for international cooperation amid the pandemic. He noted that institutions such as American Express, MasterCard and Fitch Group had been allowed into the Chinese market.