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REPEAT: PBOC To Maintain Prudent And Neutral Policy Stance

Repeats Story Initially Transmitted at 13:57 GMT Aug 11/09:57 EST Aug 11
     BEIJING (MNI) - The People's Bank of China said it will maintain its
current "prudent and neutral" monetary policy to provide a neutral and
reasonable financial environment for supply-side reform, according to its second
quarter monetary policy report published Friday night.
     The PBOC affirmed that banking system liquidity conditions had remained
neutral in the second quarter under its the prudent and neutral stance, that
credit and social financing had shown reasonable growth, that the level of
interest rates were appropriate overall, and that expectations for the yuan
exchange rate were stable.
     The central bank's open market operations had generally limited
fluctuations in the level of liquidity, helping the money market and bond market
to operate in a steady fashion, and also helping the financial system to
deleveraging effectively, the report said. The most representative interbank
rate -- the seven-day deposit repo (drepo) rate -- fluctuated in a range of
2.75% - 3.0% in the second quarter, it noted.
     The PBOC said it will continue to improve its quarterly macro-prudential
assessments (MPA) of financial institutions' operations. In particular, the PBOC
will start to include negotiable certificates of deposit (NCDs) with durations
of less than one year issued by banks with assets of more than CNY500 billion as
part of its tests of the soundness of interbank liabilities in the MPAs starting
in the first quarter of 2018. The treatment of other NCDs has not yet been
determined.
     The PBOC said it will continue to implement a prudent and neutral monetary
policy to better manage the next stage of supply-side reform and to maintain a
proper, neutral financial environment. It also emphasized the importance of
preventing financial risks, of strengthening the coordination of financial
regulation, of improving the efficiency and capability of the financial sector
to serve the real economy, and of preventing any systemic financial risks from
happening.
--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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