Call for savings to grow financial sector
By Ding Yining |
December 3, 2010, Friday
|
Print Edition
Print Edition
CHINA should channel its large amount of savings into capital markets to avoid systematic financial risks and to nurture the growth of the financial sector, according to central bank adviser Li Daokui.
"Right now, we will address the issue (of financial risk) by shifting from a loose monetary policy and slowing the growth rate of money supply as well as expand investment channels," Li said in an interview with the overseas edition of the People's Daily published yesterday.
Preventing systematic financial risks is the long-term challenge the country faces in its economic development, he said, adding that more funds will gradually be allowed to invest in overseas markets.
China's household deposits increased by 1.04 trillion yuan (US$156 billion) in September to 29.9 trillion yuan.
But Li cautioned there's a negative side to China's huge savings if a large amount of capital is withdrawn within a short time as it can hit its banking system and economy severely.
The People's Bank of China said in a November 24 statement on its website that it will use all policy tools at its disposal to steer money and credit growth back to normal.
Deputy PBOC governor Hu Xiaolian said in the statement that strengthening liquidity management is the priority for monetary policy and is key to bring monetary conditions back to normal. She added the PBOC will employ price tools, namely interest rates, as well as quantitative measures to slow lending growth.
The PBOC raised banks' reserve requirement ratio twice to a record 18.5 percent in November.
"Right now, we will address the issue (of financial risk) by shifting from a loose monetary policy and slowing the growth rate of money supply as well as expand investment channels," Li said in an interview with the overseas edition of the People's Daily published yesterday.
Preventing systematic financial risks is the long-term challenge the country faces in its economic development, he said, adding that more funds will gradually be allowed to invest in overseas markets.
China's household deposits increased by 1.04 trillion yuan (US$156 billion) in September to 29.9 trillion yuan.
But Li cautioned there's a negative side to China's huge savings if a large amount of capital is withdrawn within a short time as it can hit its banking system and economy severely.
The People's Bank of China said in a November 24 statement on its website that it will use all policy tools at its disposal to steer money and credit growth back to normal.
Deputy PBOC governor Hu Xiaolian said in the statement that strengthening liquidity management is the priority for monetary policy and is key to bring monetary conditions back to normal. She added the PBOC will employ price tools, namely interest rates, as well as quantitative measures to slow lending growth.
The PBOC raised banks' reserve requirement ratio twice to a record 18.5 percent in November.
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