The People’s Bank of China Addresses Excess Money Supply and Structural Monetary Policies
In a recent press conference, officials from the People’s Bank of China discussed the current state of broad money (M2) exceeding 300 trillion yuan and the implementation of structural monetary policies. According to Zou Lan, director of the Monetary Policy Department, the excess of broad money reflects the financial support provided to the real economy over the years. While the current stock of money is high, it is also noted that some banks may still be providing financing in excess of actual needs, leading to idling of funds.
On the other hand, Zhu Hexin, deputy governor of the People’s Bank of China, highlighted the proportion of loans returning to historical averages in the first quarter of 2023, leaving room for credit growth in the upcoming quarters. He also emphasized that there is still room for monetary policy adjustments in the future.
Furthermore, Wang Chunying, deputy director of the State Administration of Foreign Exchange, discussed the demand for foreign exchange settlement and the increased interest from overseas investors in the domestic bond market. She also mentioned plans to optimize the use of bonds through channels like the “Bond Connect” to offset margin requirements.
Overall, officials emphasized the need for continued monitoring of monetary policies, addressing the idling of funds, and supporting the real economy with targeted financing. The central bank remains committed to maintaining stability in the RMB exchange rate and ensuring a conducive environment for both domestic and foreign investors in the bond market.