Highlights of China´s
Monetary Policy in 2007
On January 4, the
Shanghai Inter-bank Offered Rate (Shibor) was officially launched. The released
Shibor products include overnight, 1-week, 2-week, 1-month, 3-month, 6-month,
9-month, and 1-year.
On January 5, with
the approval of the State Council, the PBC announced, effective January 15, a
rise of the RMB reserve requirement ratio of depository institutions by 0.5
percentage points.
On February 16,
with the approval of the State Council, the PBC announced, effective February
25, a rise of the RMB reserve requirement ratio of depository institutions by
0.5 percentage points.
On January 11, the
PBC, jointly with the China Banking Regulatory Commission, issued the Guidance
on Implementation of the Financial Support Policy through Special Central Bank
Bills and Transformation of the Operational Mechanism for Rural Credit
Cooperatives (PBC Document [2007] No. 11) to further strengthen the
positive role of financial support for the pilot reform of rural credit cooperatives
(RCCs), to intensify the reform of RCCs, to transform the operational mechanism,
and to promote stable and sound development.
On January 14, Announcement
of the People´s Bank of China ([2007] No. 3) was released to allow domestic
financial institutions, with approval, to issue RMB financial bonds in Hong
Kong, which further expanded the RMB business in Hong Kong, helped to maintain
Hong Kong´s status as an international financial center, and created a channel
for RMB holdings by Hong Kong residents and enterprises to reflow to Mainland
China.
On February 1, the
Administrative Rules on Personal Holdings of Foreign Exchange (PBC Decree
[2006] No. 3) became effective, and the Rules for Implementing the Administrative
Rules on Personal Holdings of Foreign Exchange took effect.
On February 5, the
PBC reported to the Committee of Finance and Economy of the National People´s
Congress on the implementation of monetary policy in 2006.
On February 9, the
China Monetary Policy Report, 2006, was released.
On February 26,
the Examination and Appraisal Committee of the PBC on the Issuance and
Redemption of Special Central Bank Bills for the Pilot Reform of Rural Credit
Cooperatives (RCCs) decided at its eighth regular meeting to redeem special
central bank bills totaling 9.3 billion yuan to RCCs in 125 counties (cities)
in 8 provinces and municipalities, including Jiangsu province.
On March 14, the
PBC held a "window guidance" meeting to urge commercial banks to comprehensively,
correctly, and actively implement the macro-adjustment policies formulated by
the central government, to extend loans in a reasonable and balanced manner,
and to strengthen the role of finance in improving macro-economic management.
On March 18, the
benchmark deposit and lending rates of financial institutions were raised. The
one-year benchmark deposit rate was raised by 0.27 percentage points from 2.52
percent to 2.79 percent; the one-year benchmark lending rate was raised by 0.27
percentage points from 6.12 percent to 6.39 percent; and the deposit and
lending rates of other maturities were adjusted accordingly.
On March 29, the
Monetary Policy Committee of the PBC held its first quarterly meeting of 2007.
On April 5, the
PBC announced to raise the RMB reserve requirement ratio of the depository
financial institutions, effective from April 16, 2007, by 0.5 percentage points to 10.5 percent.
On April 9, the
China Foreign Exchange Trading System introduced a new platform to integrate
RMB spot, forward and options transactions against foreign currencies as well
as pair transactions among foreign currencies.
On April 17, the
PBC reported to the Committee of Finance and Economy of the National People's
Congress on issues of liquidity and relevant policy recommendations.
On April 17, Notice
of the State Administration of Foreign Exchange on the Adjustment of Market
Access and Exit by Banking Institutions Conducting Spot Foreign Exchange
Purchase and Sale Business (SAFE Document [2007] No. 20) was released to
regulate the procedures of market access and exit by banking institutions in
conducting spot foreign exchange purchase and sale business.
On April 25, the
PBC announced to raise reserve requirement ratio of foreign exchange deposits
by 1 percentage point to 5 percent, effective from May 15, 2007.
On April 29, the
PBC announced to raise the RMB reserve requirement ratio of the depository
financial institutions, effective from May 15, 2007, by 0.5 percentage points to 11 percent.
On May 10, China
Monetary Policy Report, Quarter One 2007, was released.
On May 11, the PBC
held a "window guidance" meeting with the financial institutions to
convey instructions of the State Council and request all financial institutions
concretely improve credit and financial services so as to prevent economic growth
shifting from "slightly heating" to "overheating" and promote a sound and rapid
development of the national economy.
On May 18, the PBC
announced to raise the RMB reserve requirement ratio of the depository
financial institutions, effective from June 5, 2007, by 0.5 percentage points to 11.5 percent.
On May 18, the PBC
released the Public Announcement on Enlarging the Band of the RMB Trading
Price against the US Dollar in the Inter-bank Spot Foreign Exchange Market (PBC
Public Announcement [2007] No. 9), and decided to enlarge the floating band of
the RMB trading price against the US dollar in the inter-bank spot foreign
exchange market from 0.3 percent to 0.5 percent, effective May 21, 2007.
On May 19, the PBC
announced to slightly raise the benchmark deposit and lending rates of
financial institutions. The one-year benchmark deposit rate was raised by 0.27
percentage points from 2.79 percent to 3.06 percent; the one-year benchmark
lending rate was raised by 0.18 percentage points from 6.39 percent to 6.57
percent; and the deposit and lending rates of other maturities were adjusted
accordingly. Lending rate of housing provident funds was also raised by 0.09
percent.
On June 4, the PBC
decided in the 9th meeting of its RCCs Pilot Reform Special Central Bank Bills
Issuance, Redemption and Performance Review Committee to redeem special central
bank bills totaling RMB12.3 billion yuan for 220 rural credit cooperatives in
14 provinces and municipalities including Jiangsu.
On June 7, the PBC
approved Shanghai Gold Exchange to accept operational entities of foreign banks
in China as its members.
On June 8, the PBC
and the National Development and Reform Commission jointly issued the
Provisional Administrative Rules on RMB-Denominated Bond Issuance by Mainland
Financial Institutions in Hong Kong (PBC and NDRC Public Announcement [2007]
No. 12). On June 26, RMB denominated bonds were issued in Hong Kong.
On June 22, Notice
of the People´s Bank of China on Improving Calculation of Yields in the National
Inter-bank Bond Market was released, changing the calculation of yields in
the national inter-bank bond market based on "actual days/365" to a more
precise way of "actual days/actual days".
On June 28, the
Monetary Policy Committee of the PBC held its second quarterly meeting of 2007.
On June 29, Guidance
of the People´s Bank of China on Strengthening Financial Services to Support
Energy Conservation and Environmental Protection was released, raising
specific requirements on the banking system to improve financial services for
energy conservation and environmental protection.
On July 3, the PBC issued the Administrative Rules
on Inter-bank Funding (PBC Decree [2007] No. 20), effective on August 6,
2007, which marks the most important adjustment of administrative policies on
inter-bank funding activities in the last ten years as it comprehensively
overhauled rules governing market access, term structure, quota management,
registration, transparency and regulatory authority of the inter-bank market.
On July 17, the PBC reported to the Committee of
Finance and the Economy of the National People's Congress on monetary policy
implementation in the first half of 2007.
On July 21, the PBC decided to raise the benchmark
deposit and lending rates of financial institutions. The one-year benchmark
deposit rate was raised by 0.27 percentage points from 3.06 percent to 3.33
percent; the one-year benchmark lending rate was raised by 0.27 percentage
points from 6.57 percent to 6.84 percent; and the deposit and lending rates of
other maturities were adjusted accordingly. The lending rate of housing
provident funds was also raised by 0.09 percent.
On July 30, the PBC adjusted administrative measures
on positions of over-the-counter forward foreign exchange account, including
discounts in positions of the major commercial banks´ over-the-counter forward
foreign exchange transactions.
On July 30, the PBC announced it would raise the RMB
reserve requirement ratio of depository financial institutions, effective August 15, 2007, by 0.5 percentage points to 12 percent.
On August 8, the China Monetary Policy Report, Quarter Two 2007 was released.
On August 12, the Notice of the State
Administration of Foreign Exchange on Maintaining Current Account Foreign
Exchange Income by Domestic Institutions (SAFE Document [2007] No. 49) was
issued to remove quota management over foreign exchange accounts of domestic
institutions, and instead allow them to keep current account foreign exchange
income according to their business needs.
On August 17, the Notice
of the People´s Bank of China on Issues Regarding Launching RMB Swaps against
Foreign Currencies in the Inter-bank Foreign Exchange Market (PBC Document
[2007] No. 287) was issued, introducing RMB swaps against five foreign currencies
including the US dollar, the Euro, the Japanese Yen, the Hong Kong dollar and
the Sterling Pound in the inter-bank foreign exchange market as a more flexible
exchange rate and interest rate risk management instrument for the enterprises
and individuals.
On August 20, the State Administration of Foreign Exchange
issued the Approval on the Pilot Program of Allowing Domestic Individual
Residents to Directly Invest in Overseas Securities Market (SAFE Approval
[2007] No.276), introducing pilot program to allow domestic individual
residents to invest in overseas securities market under the precondition of
controllable risks.
On August 22, the PBC decided to raise the benchmark
deposit and lending rates of financial institutions. The one-year benchmark deposit
rate was raised by 0.27 percentage points from 3.33 percent to 3.60 percent;
the one-year benchmark lending rate was raised by 0.18 percentage points from 6.84
percent to 7.02 percent; and the deposit and lending rates of other maturities
were adjusted accordingly. The lending rate of housing provident funds was also
raised by 0.09 percent.
On August 29, the PBC purchased the first issue of
special treasury bonds worth 600 billion yuan from the domestic commercial
banks.
On September 3, the National Association of Financial
Market Institutional Investors (NAFMII) was established, which is composed of
participants in the inter-bank bond market, funding market, bills market,
foreign exchange market and gold market.
On September 4, the PBC decided at the 10th
meeting of its RCCs Pilot Reform Special Central Bank Bills Issuance,
Redemption, and Performance Review Committee to redeem special central bank
bills totaling 23.7 billion yuan for 330 rural cooperative financial
institutions in 19 provinces and municipalities including Jiangsu.
On September 5, the PBC adjusted the composition of
financial institutions eligible for the application of differentiated reserve
requirement ratio, so as to continuously use the differentiated reserve
requirement ratio as an effective policy to provide positive incentives and
disciplines for financial institutions.
On September 6, the PBC announced it would raise the
RMB reserve requirement ratio of depository financial institutions, effective September 25, 2007, by 0.5 percentage points to 12.5 percent.
On September 15, the PBC decided to raise the benchmark
deposit and lending rates of financial institutions. The one-year benchmark
deposit rate was raised by 0.27 percentage points from 3.60 percent to 3.87
percent; the one-year benchmark lending rate was raised by 0.27 percentage
points from 7.02 percent to 7.29 percent; and the deposit and lending rates of
other maturities were adjusted accordingly. The lending rate of housing
provident funds was also raised by 0.18 percentage points.
On September 24,
the PBC held a conference to analyze current economic and financial situation.
During the conference, potential risks of the economy growing from the status
of relatively fast to that of overheating was thoroughly studied, so as to
deeply understand the great significance of money and credit management for
maintaining a stable and sustainable growth of the economy. Financial
institutions were encouraged to uphold correct perception of market shares, consciously
control the pace of loan extension in line with needs of the real economy,
improve credit service, forcefully explore intermediary business and work hard
to achieve stable and sustainable business development.
On September 27,
the PBC and the China Banking Regulatory Commission jointly issued the Notice
on Strengthening Commercial Property Credit Management (PBC Document [2007]
No. 359), with a focus on adjusting and clarifying credit policies for real
estate development and housing consumption.
On September 27, the
Monetary Policy Committee of the PBC held its third quarterly meeting of 2007.
On September 29,
the PBC issued the Administrate Rules on Forward Rate Agreement (PBC
Announcement [2007] No. 20), introducing forward rate agreement business in the
market.
On October 13, the
PBC announced to raise the RMB reserve requirement ratio of the depository
financial institutions, effective from October 25, 2007, by 0.5 percentage points to 13 percent.
On October 16, the
PBC reported to the Committee of Finance and Economy of the National People´s
Congress on the implementation of monetary policy in the first three quarters
of 2007.
On November 8, the
China Monetary Policy Report, Quarter Three 2007, was released.
On November 10,
the PBC announced to raise the RMB reserve requirement ratio of the depository
financial institutions, effective from November 26, 2007, by 0.5 percentage points to 13.5 percent.
On November 30, the
PBC decided in the 11th meeting of its RCCs Pilot Reform Special Central Bank
Bills Issuance, Redemption and Performance Review Committee to redeem special central
bank bills totaling 23.8 billion yuan for 349 rural credit cooperatives in 24
provinces and municipalities including Jiangsu.
On December 5, the
PBC and the China Banking Regulatory Commission jointly issued the Supplementary
Notice on Strengthening Commercial Property Credit Management (PBC Document
[2007] No. 452), making special stipulations on issues related to housing
credit management.
On December 8, the
PBC announced to raise the RMB reserve requirement ratio of the depository
financial institutions, effective from December 25, 2007, by 1 percentage point to 14.5 percent.
On December 20,
the PBC issued special loans totaling 700 million yuan to 41 rural cooperative financial
institutions in Xinjiang Autonomous Region.
On December 20,
the Monetary Policy Committee of the PBC held its fourth quarterly meeting of
2007.
On December 21, the
PBC decided to raise the benchmark deposit and lending rates of financial
institutions. The one-year benchmark deposit rate was raised by 0.27 percentage
points from 3.87 percent to 4.14 percent; the one-year benchmark lending rate
was raised by 0.18 percentage points from 7.29 percent to 7.47 percent; and the
deposit and lending rates of other maturities were adjusted accordingly. The lending
rate of housing provident funds remained unchanged.
