China to promote currency reform
Updated: 2006-05-24 19:27
China's central bank has asserted anew its commitment to push for a more
flexible yuan as it seeks to remedy shortcomings in its financial markets.
An exchange store staff counts Chinese RMB
banknotes in Hong Kong May 16, 2006. [Reuters]
In its 2005 report taking stock of the country's financial reforms, the
People's Bank of China said liberalization of its exchange rate regime would
continue to be a key policy focus.
"We will push forward reform of the foreign exchange management system and
perfect the formation mechanism of the yuan's foreign exchange rate," the
central bank said.
It also said it would push ahead with efforts to liberalize interest rates
and seek to create new financial products, while continuing reform of
state-owned commercial banks.
The bank said it would seek to maintain stable credit growth and improve the
effectiveness of monetary policy in steering the economy.
The central bank pointed to a set of "significant" problems remaining in the
financial sector, including companies' over-reliance on bank loans for funding,
which it said compounded the risks of bad loans for the country's banks.
To promote more efficient allocation of capital, it said it would encourage
greater interaction among the banking and insurance sectors and capital markets,
while taking account of the risks of allowing greater cross-sector dealings.
"We aim to build up and improve the sound coordination and development among
the money market, capital markets, and insurance sector to further let the
financial market play a fundamental role in allocating financial resources," it