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PKG
INTRO
Despite media reports about an interbank liquidity shortage, China's central bank on Wednesday said liquidity in the money market is adequate.
PKG
The People's Bank of China, which is China's central bank, has admitted liquidity growth in the banking system has accelerated in recent months as capital inflow into China has risen notably.
This is thanks to China's trade surplus in recent months and the U.S. decision not to taper quantitative easing.
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 17.5 trillion U.S. dollars at the end of September.
The growth rate was 0.4 percentage points higher than at the end of 2012.
The central bank says pressure for credit expansion is 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 of this year reached 1.2 trillion dollars, an increase of 91 billion dollars from a year earlier.
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 1.4 trillion dollars.
The central bank says the inter-bank borrowing rate in September stood at 3.47 percent and the bond reverse repo rate, 3.49 percent.
Both are roughly the same rate as the previous month.
The central bank says the difference between the highest points of the 1-day rate and the 1-month rate was just 50 to 60 base points, which are clear signs of stable interbank rates and low volatility in the banking system.
So far this year, the Chinese central bank 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.
The central bank has also conducted regular open market operations, including repurchase agreements and bills, aimed at managing liquidity in the money market.
In the coming months, the central bank says it'll continue implementing prudent monetary policies and maintaining a balance between steady growth, economic restructuring, deepening reform and preventing risk.
Besides, it'll also continue to use a variety of monetary policy tools to manage the liquidity in the banking system, and keep credit growing at a reasonable and proper pace.
