The People’s Bank of China (PBOC) : The comprehensive financing costs of small and micro enterprises will be reduced steadily


Beijing Business Daily (Reporter Liu Sihong) On February 11, the People’s Bank of China released a report on the implementation of China’s monetary policy in the fourth quarter of 2021. As for the next stage of monetary policy, it mentioned deepening the market-oriented reform of interest rates and exchange rates and smoothing the transmission channels of monetary policy.We will improve market-based interest rate formation and transmission mechanisms, improve the policy interest rate system of the central bank, and guide market interest rates to fluctuate around policy interest rates.We should give full play to the effectiveness of LPR reform, give full play to the role of LPR reform in optimizing resource allocation, promote financial institutions to allocate more financial resources to small and micro enterprises in a market-oriented manner, enhance the competitiveness of the credit market for small and micro enterprises, and promote the stable and decrease of the comprehensive financing cost of small and micro enterprises.We will urge the implementation of measures to optimize regulation of deposit interest rates, regulate competition in the deposit market, stabilize the cost of banks’ debt, guide corporate lending rates to decline, and effectively reduce overall financing costs for enterprises.We will steadily deepen market-oriented reform of the exchange rate, adhere to a managed floating exchange rate regime based on market supply and demand and adjusted with reference to a basket of currencies, make the RMB exchange rate more flexible, and use the exchange rate as an automatic stabilizer for macroeconomic adjustment and international payments.We will strengthen expectations management and keep the RMB exchange rate basically stable at an appropriate and balanced level.Develop foreign exchange market, and guide enterprises and financial institutions to set up “risk neutral” concept, guiding principle of financial institutions based on the real needs and risk neutral principle of active service for micro, small and medium enterprises to provide exchange rate risk aversion, micro, small and medium enterprises exchange rate risk aversion to reduce costs, enhance their own business of foreign exchange risk management, and maintain stable and healthy development of the foreign exchange market.We will continue to steadily advance the internationalization of the RMB, further expand its use in cross-border trade and investment, deepen foreign currency cooperation, and develop the offshore RMB market.We will carry out trials for high-quality opening up of cross-border trade and investment, further liberalize and facilitate cross-border trade and investment, and steadily make the RMB convertible under capital accounts.

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