central bank

Xinhua News Agency, Beijing, January 8Topic: Serve high-quality development well and keep the bottom line of risks – Relevant person in charge of the People’s Bank of China talks about implementing the spirit of the Central Economic Work Conference

Xinhua News Agency reporter Wu Yu

The Central Economic Work Conference held at the end of 2023 systematically deployed economic work in 2024. How to implement the important deployments of the meeting such as “prudent monetary policy must be flexible, appropriate, precise and effective”, “continue to effectively prevent and resolve risks in key areas”, and “expand high-level opening up”? The relevant person in charge of the People’s Bank of China recently accepted an interview with a reporter from Xinhua News Agency.

The picture shows the head office building of the People’s Bank of China.Xinhua News Agency

 Create a good monetary and financial environment for high-quality economic development

The Central Economic Work Conference proposed that prudent monetary policy must be flexible, appropriate, precise and effective. Zou Lan, director of the Monetary Policy Department of the People’s Bank of China, said that the People’s Bank of China will strengthen counter-cyclical and inter-cyclical adjustments and make efforts from the three aspects of total volume, structure and price to create a good monetary and financial environment for high-quality economic development.

In terms of total amount, the People’s Bank of China will comprehensively use open market operations, medium-term lending facilities, re-lending and rediscounting, reserves and other basic currency injection tools to provide strong support for the scale of social financing and the reasonable growth of money and credit. At the same time, we will prevent the accumulation of funds, guide financial institutions to strengthen liquidity risk management, and maintain the smooth operation of the money market.

Zou Lan said that it is necessary to reasonably grasp the relationship between the two largest financing markets, bonds and credit. On the one hand, we strengthen coordination with fiscal policies to ensure the smooth issuance of government bonds and continue to promote the development of corporate credit bonds and financial bond markets; on the other hand, we support financial institutions to actively tap credit needs and project reserves around nine key tasks, and take multiple measures simultaneously Promote reasonable growth of loans.

In terms of structure, the People’s Bank of China will give full play to the dual functions of the total volume and structure of monetary policy tools, revitalize the stock, and improve efficiency.

“Optimizing the capital supply structure must achieve both increases and decreases.” Zou Lan said that in terms of increase, we must further improve the guidance effectiveness of monetary and credit policies, closely follow major strategies, key areas and weak links, and focus on technology, finance, green Five major articles on finance, inclusive finance, pension finance, and digital finance serve high-quality development. In terms of reduction, it is necessary to revitalize financial resources that are inefficiently occupied through various methods such as debt restructuring and market clearing.

In terms of prices, Zou Lan said that the People’s Bank of China will continue to deepen the market-oriented reform of interest rates and promote the stabilization and decline of comprehensive social financing costs. At the same time, financial institutions are guided to accelerate the development of the over-the-counter bond market, which not only provides households with more investment options, but also further unblocks diversified channels for converting savings into investments.

 Firmly adhere to the bottom line of preventing systemic risks

In recent years, the People’s Bank of China, together with relevant departments and localities, has resolutely fought to prevent and resolve major financial risks. A number of outstanding risk points with great impact, urgency, and overall significance have been effectively dealt with, and financial risks have been generally converged and generally controllable.

Sun Tianqi, director of the Financial Stability Bureau of the People’s Bank of China, said that my country’s current financial system is generally stable. The central bank financial institution rating results released by the People’s Bank of China for the second quarter of 2023 show that 3,655 banks are within the safety boundary, with assets accounting for 98.3% of the total assets of all participating banks. The 24 major banks have always received excellent ratings, and their asset scale accounts for about 70% of the total assets of the banking industry. They are the “ballast stone” of my country’s financial system. After continuous reforms and risk reduction, the number of high-risk banks has shown a downward trend, and has dropped by almost half from the peak in 2019. The reform direction and risk reduction ideas for the existing high-risk banks have been clear and are being steadily implemented.

The Central Economic Work Conference proposed to continue to effectively prevent and resolve risks in key areas. Sun Tianqi said that as my country’s economy continues to rebound and improve, my country’s financial system will become healthier and more stable. In the next step, the financial management department will comprehensively strengthen financial supervision, bring all financial activities under supervision in accordance with the law, and eliminate regulatory gaps and blind spots. Give full play to the role of stress testing, improve the financial risk monitoring, assessment and prevention and control system, establish an early correction system with hard constraints for new high-risk financial institutions, clarify the rectification deadlines and requirements, and achieve “early identification, early warning, and early exposure of risks” , early treatment.”

“my country’s deposit protection level remains high, and deposit insurance can provide full protection for more than 99% of depositors.” Sun Tianqi said that we will further improve the risk disposal responsibility mechanism with consistent powers and responsibilities and compatible incentives and constraints, and give full play to the professionalism and effectiveness of deposit insurance. Normalize risk disposal functions, strengthen the construction of the financial stability guarantee system, and firmly maintain the bottom line of no systemic risks.

 Improve the quality and level of RMB internationalization

The Central Economic Work Conference made important arrangements for expanding high-level opening up to the outside world. Promoting the international use of the RMB is also an important part of promoting high-level opening up.

“With the development of China’s economy and the improvement of comprehensive national strength, the demand of business entities to use RMB for cross-border and international payments in trade and investment is also rising.” Li Bin, director of the Macro-Prudential Administration Bureau of the People’s Bank of China, said that in the first 11 months of 2023 The amount of RMB cross-border receipts and payments was 48 trillion yuan, a year-on-year increase of 24%. Among them, the proportion of settlement in goods trade using RMB is 25%, which is the highest level in recent years.

In the next step, the People’s Bank of China will pay more attention to improving the quality and level of RMB internationalization, steadily and steadily promote the international use of RMB, and better meet the market needs of business entities such as transaction settlement, investment and financing, and risk management.

Li Bin introduced that the People’s Bank of China will focus on trade and investment facilitation, continue to do a good job in system design, policy support and market cultivation, improve basic institutional arrangements and infrastructure construction for the cross-border use of RMB, enhance cross-border RMB business to serve the real economy and promote high-end Ability to develop quality. At the same time, we will steadily and orderly promote the comprehensive institutional opening of the financial market, further improve the degree of openness and access to my country’s foreign exchange and financial markets, enrich risk hedging tools, and build a more friendly and convenient investment and financing environment.

In addition, the People’s Bank of China will strengthen the construction of the RMB cross-border payment system and improve the efficiency and security of RMB clearing. Promote the construction of overseas RMB markets, improve the RMB liquidity supply mechanism in the offshore market, enrich offshore RMB risk management tools, and enrich offshore RMB financial products.

“We will continue to strengthen the supervision of cross-border RMB business to ensure that RMB internationalization advances steadily while maintaining the bottom line of safety.” Li Bin said.

2024-01-08 14:31:17
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