The People’s Bank of China (PBOC) stated in early Tuesday that it would provide assistance to a sovereign fund when it is needed as it strongly supports its decision to buy more stock according to Bloomberg.
In a statement, the Central Bank of China said it would carry forward the funding ad through a re -lending program to the Central Huagine Investment Limited, when necessary, the capital market will ensure stability to ensure the stability.
Additionally, the China Chengtong Holdings Group and the China Reform Holdings Corp (Guoxin) said they would increase investment in stock and ETFs, which echo a similar step by Sovereign Fund Central Huizin in the first day.
Market reaction
At the time of writing, the AUD/USD pair is trading 0.14% more on the day to trade at 0.5995.
Pboc faqs
The objective of the primary monetary policy of People’s Bank of China (PBOC) is to protect price stability, including exchange rate stability and promote economic growth. The central bank of China aims to implement financial reforms, such as opening and developing financial markets.
The PBOC is owned by the state’s People’s Republic of China (PRC), so it is not considered an autonomous institution. The Secretary of the Chinese Communist Party (CCP) Committee nominated by the Chairman of the State Council has a significant impact on the management and direction of PBOC, not the Governor. However, Mr. Pan Gongsheng currently holds both these positions.
Unlike Western economies, PBOC uses a broad set of monetary policy devices to achieve its objectives. Primary equipment includes seven-day reverse repo rate (RRR), medium-term loan facility (MLF), foreign exchange intervention and reserved requirement ratio (RRR). However, the Lone Prime Rate (LPR) is China’s benchmark interest rate. Changes in LPR directly affect the rates that need to be paid in the market for loan and mortgage and interest paid on savings. By changing the LPR, China’s central bank can also affect the exchange rates of Chinese Rainminby.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are Digital Lenders Webank and Mybank, which according to Straits Times are supported by Tech Giars Tensent and Ant Group. In 2014, China allowed domestic lenders to be fully capitalized by private funds to operate in state-serial sector.
