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Free AccessMNI POLICY: PBOC Should Up Reserves Rate To boost Loans:Ex-Gov
BEIJING (MNI) - The People's Bank of China should consider raising the
deposit reserve rate to help banks lower lending costs to companies, Dai
Xianglong, the former central bank governor said.
"The interest rate the PBOC pays for the deposit reserves that banks are
required to set aside has been set at 1.62% for a long term, and the authorities
should raise it to a level not lower than the average deposit rate," Dai told in
a forum held by China Finance 40 Forum, a prominent Chinese think tank.
Dai, also warned China must be alert to systemic risk as the financial
markets open up, including a plunge in the stock market, increases in defaults
and a sharp yuan depreciation, adding that the authorities must do their best to
avoid them.
Dai noted China has made efforts to deal with non-performing loans during
the process of market-oriented reforms in the banking system, noting the central
bank bailed out the four state-own banks three times in the period between 1998
to 2007 and wanted to avoid the issue again. The authorities should continue
monitoring NPLs and forbid banks covering them by issuing new debt.
--SCALE DOWN OWNERSHIP
The former governor also suggested that the government should withdraw from
direct intervention in the operation of state-own banks and continue reducing
their stakes, adding as of the end of 2017, the government has paid 68% of the
net capital of the five state-own banks in average.
Dai also said local governments should not become shareholders in small and
medium-size local banks, as any administrative intervention could unleash a host
of follow-up issues.
Xiao Gang, a former head of the securities regulator, said state-owned
banks should push on with global expansion plans, taking advantage of China's
One Belt, One Road Initiative, as some foreign banks struggle with falling
profits and lower operating margins.
The yuan's globalization will also be boosted through the process of
overseas expansion by the big banks, Xiao noted.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMQPB$,M$A$$$,M$Q$$$,MI$$$$,MGQ$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.