New Session of Currency Policy Committee Held First Meeting

The 2000 second quarter regular meeting of Currency Policy Committee of the People's Bank of China was recently held in Beijing, the first such meeting since the establishment of the new session of Currency Policy Committee. The meeting confirmed fully the current economic and financial developmental trend. It is held that the key points of the currency policy in the second quarter and a period afterwards is to properly handle the relationship between preventing against financial risk and supporting economic growth, and to strengthen the support for economic development on the principle of steady operation.

The meeting pointed out that the present policy measures should continue to be executed, and the currency policy tools should be used comprehensively to expand currency supply in a moderate way; the channels for currency policy to be carried forward should be made passable. The credit mechanism and policy of commercial banks should be improved and the loan for national debt-financed infrastructure projects and the issuance of loan for technological transformation should continue to be granted. Loan to rural credit should be further strengthened and the financial service to medium-and-small enterprises and high-tech industries should be further improved so as to support the great development in the western region.

The meeting held that China's ratio of broad-sense currency to GDP (M2/GDP) was relatively higher with the credit risk focused too much on banks, and the ratio of enterprise liabilities too high. So the relationship between direct finance and indirect finance should be properly dealt with and the capital market should be actively developed to raise the ratio of direct finance steadily.

In addition, the meeting stressed that the reform of interest rate should be actively pushed ahead to make it marketable in order to bring its role in optimizing the resource allocation into full play. The reform of state-owned commercial banks should be steadily facilitated to improve their legal person management structure and to raise capital through multi-channels in line with the market principle and the level of financial supervision and management should also be improved.



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