Outlook allows for ability to set policy free of outside influence

Despite tighter global cash liquidity, China's monetary authority feels more confident in its decision to fine-tune rules making it easier for some commercial banks to lend to small businesses and rural borrowers, thanks in part to strong expectations for the economy, a senior central bank official told China Daily in an exclusive interview.

The People's Bank of China decided on Sept 30 to lower the cash reserve amount by at least one-half of a percentage point required of commercial banks that meet criteria on lending to rural and micro-enterprises. The policy will go into effect next year and is expected to lead to more loans to such businesses.

The choice of "targeted cutting" to the required reserve ratio, instead of a broad-based monetary loosening, will not violate policymakers' determination to tighten financial regulation and lower banks' leverage ratio, said the official, who works with central bank's monetary policy department and the Monetary Policy Committee, but declined to be named.