Finance sector to serve the real economy

Source: Xinhua | 2018-11-12

China’s central bank has said it will maintain a prudent and neutral monetary policy, and make the financial sector better serve the real economy.

The latest third-quarter China Monetary Policy Report by the People’s Bank of China also demanded strengthening policy coordination, improving the transmission mechanism of monetary policy and innovations in monetary policy instruments and mechanisms.

However, the central bank also admitted that constraints exist in the structure of monetary policy transmission. To address the problem, the central bank has taken targeted measures, including issuing special-purpose bonds for private companies, expanding the range of collaterals and precisely reducing reserve requirement ratio to better support the development of private companies and small and micro-enterprises.

Since the beginning of 2018, the central bank has also put into effect a raft of measures to keep medium and long-term liquidity via cutting down RRR and Medium-term Lending Facility. China has reduced RRR four times this year, releasing 2.3 trillion yuan (US$331.75 billion) into the market.