MNI POLICY: Stimulus Appropriate, Timely Withdrawal: PBOC Yi

     BEIJING (MNI) - Fnancial policies dealing with the Covid-19 pandemic shall

be appropriate in amount, without causing moral hazard and be withdrawn when no

longer necessary, leaving space for future policy manoeuvres, Yi Gang, China's

central bank Governor said Thursday.

     The People's Bank of China will maintain ample liquidity in the second half

of the year, helping boost new yuan loans by nearly CNY20 trillion and total

social financing to over CNY30 trillion, Yi said at the Lujiazui Forum held

online.

     China values conventional monetary and fiscal policies and refrains from

excess liquidity, monetizing deficits and pursuing negative interest rates, said

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission.

Guo urged other countries to save some policy options for the future before

introducing new stimulus. 

     Quantitative easing measures that began in 2008 are still affecting the

global economy, Guo said.

     China will also urge lenders to give up CNY1.5 trillion profits this year

to help businesses struggling with the pandemic through lower interest rates,

direct policy tools and cutting fees, said Yi.

     Meanwhile, Guo urged insurers to increase investment in medium- and

long-term corporate bonds. With a current balance of insurance funds of CNY20

trillion, only CNY2.2 trillion is invested in corporate bonds, Guo said.

     "More funds should be used to purchase corporate bonds, especially in

telecommunications, transportation, as well as high-tech and large-scale

infrastructure," said Guo.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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