People’s Bank of China outlines dual-pillar framework for stability

  • People’s Bank of China sets monetary and financial stability as central objectives.
  • Deputy Governor Lu Lei calls for a dual-pillar framework combining monetary policy and macroprudential management.
  • China plans to align financing and money-supply growth with economic growth and price targets.

The People’s Bank of China will center its work on monetary and financial stability through a dual-pillar framework combining monetary policy with macroprudential management (system-wide financial-risk oversight). Deputy Governor Lu Lei said the central bank should improve countercyclical and cross-cyclical adjustments, keeping social financing and money-supply growth aligned with economic expansion and price-level targets. The framework also calls for stronger market-based interest-rate formation, regulation and transmission, greater exchange-rate flexibility, and the yuan’s basic stability at a reasonable, equilibrium level. Lu also emphasized improving monetary-policy communication and expectations management.

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People’s Bank of China outlines dual-pillar framework for stability - CoinPost Terminal