PBOC vice-governor calls for global macroeconomic policy coordination

23 Mar, 2020 13:19
source: Singularity Financial

Singularity Financial Hong Kong March 23, 2020 – Chen Yulu, a vice governor at the People’s Bank of China, said Sunday at a press conference that two ways the country is contributing to global financial stability is by keeping domestic financial markets stable and participating in international discussions for macroeconomic policy coordination.

“While it’s true the crisis isn’t over for China, (there are) lessons that can be learned from China,” Helge Berger, China mission chief and assistant director in the Asia and Pacific department at the International Monetary Fund, said in a phone interview Friday with CNBC.

“They also demonstrate that it’s important policymakers have to be ready for what is an unavoidable slowdown in growth. … The economic fallout from the virus is going to be severe,” Berger said. “This is meaningful and requires our attention.”

China’s stock and bond markets are the second-largest in the world. “As a result, maintaining Chinese financial market stability is a great contribution to global financial market stability,” Chen Yulu, a vice governor at the People’s Bank of China, said at a press conference on Sunday.

“The PBoC also took the initiative to report the impact of the virus and effective response measures to the central banks of G20 countries and major international financial institutions,” he said. Chen noted the central bank governor Yi Gang has exchanged views “multiple times” with International Monetary Fund President Kristalina Georgieva, Bank for International Settlements General Manager Agustin Carstens, and U.S. Federal Reserve Chairman Jerome Powell on how monetary policy can effectively respond to the epidemic.

Rather than cutting rates or launching large-scale stimulus programs, China’s central bank has been more conservative and on Friday even kept a new benchmark lending rate called the loan prime rate unchanged in March from the prior month. The PBoC has made some targeted interest rate cuts, and announced hundreds of billions of yuan in special loans to support businesses hit hard by the virus.

“China really wants to see more money coming into the country, which is why it will not cut its interest rates anywhere near (other countries and is) unlikely to depreciate its currency,” Michael Pettis, professor of finance at Peking University, said Sunday during his  interview with media.