The impact of Fed policy changes on Chinese markets is limited
BEIJING (Reuters) – Stimulus measures implemented by the Federal Reserve over the past year and future policy changes the US central bank has signaled will have limited impact on Chinese financial markets, a head of the Chinese central bank.
“The positive effect of China’s normal monetary policy is emerging,” Sun Guofeng, head of the People’s Bank of China (PBOC) monetary policy department, said at a press conference. He said politics returned to normal after the COVID-19 outbreak in China was brought under control in May.
“The next step is to run our own affairs well, and we need to keep our monetary policy stable.”
China will keep the yuan exchange rate virtually stable at a reasonable level, step up prudent management of cross-border capital flows, and guide market expectations.
Keeping China’s benchmark lending rate for business and household loans, the Loan Prime Rate (LPR), at a reasonable level, Sun said, is also necessary to anchor the money supply. The PBOC kept the LPR stable for the 11th consecutive month in March.
Wang Xin, director of the central bank’s research office, said at the same briefing that the PBOC has launched a multilateral digital currency research pilot program with monetary authorities in Hong Kong, Thailand and the United Arab Emirates.
The pilot project is to study so-called payment-for-payment (PvP) settlement in cross-border currency pair transactions using distributed ledger technology, Wang said.
Wang said the PBOC is also testing cross-border use of the digital yuan with the Hong Kong Monetary Authority.
PBOC Vice Governor Liu Guiping, who was also present at the briefing, said China will also gradually integrate climate-related risks into the PBOC’s macroprudential regulatory framework.
“We will also advance the principles of green investment for Belt and Road projects, and strictly control overseas investment in new coal-fired power plants,” Liu said, adding that Beijing would work with them. United States to advance the sustainable financing agenda for the G20 countries. .
(Reporting by Stella Qiu, Cheng Leng and Tony Munroe; editing by John Stonestreet & Simon Cameron-Moore)