The sound monetary policy will provide more support for the real economy. Giving top
priority to stability, the PBC will take proactive measures to boost market confidence.
With proper intertemporal adjustments, it will give play to the role of monetary policy
instruments in adjusting both the aggregate and the structure. It will resolutely refrain
from launching a deluge of strong stimulus policies. Financial policies and measures
will be implemented to stabilize businesses and secure employment, and support will
be focused on MSBs and COVID-stricken industries and vulnerable populations. Using
a mix of monetary policy instruments,
the PBC will see to it that the liquidity is
adequate at a reasonable level, the credit aggregate grows at a steadier pace, the growths
of M2 and the AFRE are basically in line with that of nominal GDP, and the macro
leverage ratio is basically stable. The structural monetary policy tools are expected to
play a supportive role in guiding financial institutions toward proper loan making and
channeling more financial resources to key areas, weak links, as well as those
businesses and industries that have been hit hard by COVID-19. An additional quota
will be provided for central bank lending supporting agro-related businesses and MSBs
when appropriate. The facilities supporting inclusive MSB loans, the central bank
lending for sci-tech innovation and the special central bank lending for inclusive elderly
care services will play their due roles, as will the CERF and the special central bank
lending targeted for clean and efficient coal use. The PBC will improve the marketoriented interest rate formation and transmission mechanism and optimize the central
bank policy rate system. While enhancing regulation over deposit rates,
the PBC will
ensure that the mechanism for market-oriented deposit rate adjustments plays an
important role and contributes to stabilizing the liability costs for banks. The overall
financing costs for business are expected to be brought down with the LPR reform
continuing to unleash its potential. The PBC will keep a close watch on price
movements and will support the production and supply of grains and energies so as to
maintain overall price stability. Pursuing a managed floating exchange rate regime
based on market supply and demand with reference to a basket of currencies, the PBC
will strengthen macro-prudential management for cross-border capital flows, enhance
expectation management, and guide market entities to be risk-neutral. With the smooth
operation of the foreign exchange market, the RMB exchange rate will be kept basically
IV
stable at an adaptive and equilibrium level. While paying close attention to monetary
policy shifts in the major advanced economies, the PBC will focus on domestic issues
while properly balancing the internal and external equilibria. It will coordinate the
efforts to prevent and resolve major financial risks and firmly defend the bottom line
whereby no systemic risk will occur by improving the holistic approach and following
market principles and the rule of law. With great efforts to stabilize the macro economy
and to keep economic performance within a reasonable range, the PBC will set the stage
for the 20th CPC National Congress.
