MNI BRIEF: PBOC To Retain Normal Policy Stance - Yi Gang

The People’s Bank of China will enhance efforts to stabilise credit expansion and push lenders to lower real interest rates in a bid to support the economy, Governor Yi Gang said in a report submitted to the National People’s Congress.

The central bank will keep liquidity ample and strengthen credit support to the real economy, while it will further reduce the cost of financing for companies and assist household consumption, according to the report released on the PBOC’s website on Sunday. The Bank will use its structural tools to shore up key sectors, including carbon emissions reduction, tech innovation, aged care, transportation, and well as supporting the upgrading of manufacturing equipment.

“China has the conditions to retain a normal monetary policy stance for as long as possible for a period of time,” he said, adding the PBOC had not implemented quantitative easing and negative interest rates since the outbreak of the Covid, which had contributed to stable and controllable prices.

Financial authorities will accelerate the disposal of bad loans, support recapitalisation of middle-sized and small banks, mitigate risks at small financial institutions and prevent debt risks at big companies, the report said.

The PBOC is considering the introduction of rules and policies on e-CNY and will push forward the yuan internationalization at an orderly pace. Authorities will develop the futures and derivatives markets and facilitate the listing of qualified companies abroad, Yi noted.

The authorities will help stabilise the property market and set up a “new pattern” for the sector’s growth, he said. The Bank will complete reforms relating to the financial businesses of big internet platforms as soon as possible.