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MNI (London)
     BEIJING (MNI) - The People's Bank of China will continue with a targeted
efforts "flexible and appropriate" but prudent monetary policy in the wake of
the Covid-19 pandemic, Governor Yi Gang told reporters Tuesday.
     Yi also warned that Chinese banks will likely face a rise in non-performing
loans, a consequence of the authorities' attempts to expand credit to aid
companies impacted by the economic impact of the outbreak . Spill-over effects
from overseas markets will also impact China's markets, giving rise to
uncertainties in the country's balance of international payment and cross-border
capital flows, Yi added.
     The governor also touched on the future plans for aiding SMEs, opening-up
of the financial markets and a digital currency. Here are the major points:
     - China has mostly been restored to some degree of normality and the
economy remains resilient on strong domestic demand. Since Feb. 1, the PBOC has
unveiled CNY5.9 trillion countercyclical measures, leading a surge in credit
     - The PBOC will further deepen reform of its Loan Prime Rate to smooth the
transmission of money market rates to loan rates. The use of the LPR has guided
deposit rates lower as banks automatically trim costs to match returns on
     - The central bank will further support SMEs by enhancing credit loans,
improving policy guarantees, boosting corporate bonds, and delaying the
repayment of loan capital and interests. The PBOC will support the banks selling
CNY300 billion bonds this year specifically helping SMEs.
     - The outbreak has led to a deterioration in the quality of banks' assets,
particularly those of some small and medium-sized banks. The PBOC will support
small banks recapitalizing and improving their management.
     - The PBOC is piloting the use of its digital currency (DC/EP) in some
cities like Shenzhen, Suzhou, Xiongan and Chengdu, but it has not set a
timetable for its launch.
--MNI Beijing Bureau; +86 (10) 8532 5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: M$A$$$,M$Q$$$,MT$$$$,MGQ$$$]
MNI London Bureau | +44 203-865-3812 |

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