Economy News

China Central Bank to extend its normal monetary policy

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China Central Bank has said it plans to extend its normal monetary policy as far as possible. It stressed that asset purchases are not necessary. However, experts interpret the statement as an attempt to calm down the financial panic brought by the Evergrande crisis.

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Earlier this month, Lee Kang, president of the People’s Bank of China, said in an article in the academic journal “Financial Research” that “asset purchases are not a normal monetary policy tool, but a choice when the market is troubled.”.

According to Kang, asset purchases undermine central bank confidence, create moral hazard, and blur the boundaries between market failure and central bank monetary policy.

“The china central bank should avoid asset purchases as much as possible,”(…) “If necessary, intervene to help restore normal functioning rather than replace it”. He emphasized that shortening the period is necessary.

China may be able to maintain its 5-6% economic growth rate this year, according to him..

“Interest rates in the world’s major developed countries tend to fall for a long time,”. “Policy rates in some countries are close to zero,” he said.

Hong Kong’s South China Morning Post (SCMP) reported today that six Chinese banks had announced plans to buy back their shares. These included Ping An Bank and Shanghai Bank.

SCMP believes “this boom in share buybacks by Chinese banks will be able to restore some confidence in Chinese bank shares, which are struggling in the Hengda debt crisis.”

Recent ruling on cryptocurrencies

The People’s Bank of China has recently prohibited exchanges, order matching, token issuance, and derivatives for virtual currencies. In addition, the PBOC also stated that foreign exchanges providing services in mainland China are illegal.

“Overseas virtual currency exchanges that use the Internet to provide services to domestic residents are also considered illegal financial activities,”. The bank also added that they will conduct investigations on workers at foreign cryptocurrency exchanges.

For MetaNews.

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