PBOC to back state progress
Print Edition
THE People’s Bank of China will help the government to rebalance the economy and increase money supply when necessary to maintain financial stability, central bank Governor Zhou Xiaochuan told the Boao Forum in Hainan Province yesterday.
He explained that the PBOC is not wholly independent unlike central banks in some other countries because China “is going through a transitional and restructuring period. The central bank needs to work closely with other government departments to drive the progress.”
The PBOC also does not operate independently because China’s capital market is not mature enough to allow for wholly market-oriented operation by commercial banks, Zhou said.
China has been using “unconventional monetary policies” in the past three decades to develop the capital market to meet fund requirement for carrying out reforms, Zhou said.
The PBOC has to offer banks liquidity for restructuring and has paid the price in striving to cool inflation and financial bubbles, Zhou said, without elaborating. China has greatly boosted money supply to tackle the financial crisis in 1998 and 2008.
“The unconventional monetary policies are not only used to boost economic growth but also to maintain financial stability,” Zhou said.
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