Despite media reports about an
interbank liquidity shortage, the People's Bank of China (PBOC, central
bank) said Wednesday in a statement that liquidity in the money market is
adequate.
PBOC admitted that liquidity growth in the
banking system has accelerated in recent months as capital inflow into
China had risen notably, owing to China's trade surplus in recent months
and the U.S. decision not to taper quantitative easing (QE).
According to the central bank, China's M2,
a broad measure of money supply that covers cash in circulation and all
deposits, rose 14.2 percent year on year to 107.74 trillion yuan (17.5
trillion U.S. dollars) at the end of September. The growth rate was 0.4
percentage points higher than that for the end of 2012.
PBOC said pressure for credit expansion was
still high because of fast growth of new loans in recent months and
increasing trade surplus and capital inflow.
China's new yuan-denominated lending in the
first three quarters this year reached 7.28 trillion yuan, an increase of
557 billion yuan from a year earlier, according to PBOC.
The new lending increase was the second
highest in the country's history, only after that for the same period of
2009, when lending stood at 8.67 trillion yuan.
Though so, PBOC said the inter-bank
borrowing rate and bond reverse repo rate in September stood at 3.47
percent and 3.49 percent on average, respectively, both of which were
roughly flat against the previous month.
The difference between the highest points
of the 1-day rate and the 1-month rate was just 50 to 60 base points,
which were clear signs of stable interbank rates and low volatility in the
banking system, the central bank said.
So far this year, the PBOC has used such
tools as reverse repurchase agreements, a short-term lending facility, and
strengthened macro prudent management, so as to deliver stable interbank
rates, it said.
PBOC has conducted regular open market
operations, including repurchase agreements and bills, aiming to manage
liquidity in the money market.
In the coming months, the PBOC said it
would continue implementing prudent monetary policies and maintaining a
balance between steady growth, economic restructuring, deepening reform
and preventing risk.
PBOC would continue to use a variety of
monetary policy tools to manage the liquidity in the banking system, and
keep credit and total social financing aggregate, a broad measure of
liquidity in the economy, growing at a reasonable and proper pace,
according to the statement.
Source from China Daily |