China’s Central Bank to Support Moderately Loose Monetary Policy to Stimulate Economy
China’s central bank chief, Pan Gongsheng, announced on Monday that the government will support a moderately loose monetary policy to maintain ample liquidity in the market. The move is aimed at stimulating the economy and softening the impact of geopolitical uncertainties.
According to Pan, governor of the People’s Bank of China, the central bank will apply various tools such as interest rates and required reserve ratio to supply liquidity in the market. This underscores Beijing’s commitment to deploy its most aggressive monetary tactics to revive the world’s second-largest economy.
Pan made the remarks at the Asia Financial Forum in Hong Kong, where he also revealed that the central bank will substantially increase the country’s foreign exchange reserves in the area of asset allocation in Hong Kong. Additionally, Beijing will support the Hong Kong Monetary Authority to use a “swap fund” scheme to replenish the liquidity of the market.
The currency swap agreement currently allows Hong Kong to swap up to 800 billion yuan.