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PBOC’s Over CNY1 Tln Remittance May Boost M2 Growth: Guan Tao

MNI (Singapore)

The People’s Bank of China, which revealed more than CNY1 trillion of its profits from FX reserves to the central fiscal coffer last night, is likely to create a CNY7.23 trillion increase in M2 this year, or boosting annual M2 growth by 3 pp by yearend, the Securities Times reported citing economist Guan Tao of Bank of China International. The over CNY1 trillion extra liquidity will lower borrowing rates in the real economy, and the liquidity boost through this remittance differs from an RRR cut, which impacts funding for the medium to long terms, Guan said.

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