6.7168: PBOC sets USD/CNY reference rate, compared with 6.7156 previously

6.7168 is Friday’s USD/CNY central rate. The People’s Bank of China (PBOC) has set the fixing for the upcoming trading session at this level, against the previous day’s 6.7156.

PBOC: frequently asked questions

The People's Bank of China’s core responsibilities

Price stability, including exchange rate stability, and economic growth are the main monetary policy goals of the People's Bank of China (PBoC). The central bank also seeks to carry out financial reforms, including opening up and developing the financial market.

PBoC ownership and leadership

State ownership by the People's Republic of China (PRC) means the PBoC is not regarded as an autonomous institution. Rather than the governor, it is the Chinese Communist Party (CCP) Committee Secretary who has a key influence on the bank’s management and direction. The Secretary is nominated by the Chairman of the State Council. Mr Pan Gongsheng currently holds both the Secretary and governor posts, however.

The PBoC’s principal monetary policy instruments

To meet its objectives, the PBoC draws on a wider range of monetary policy instruments than those used in Western economies. Its main tools comprise the seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), foreign exchange intervention and the Reserve Requirement Ratio (RRR). China’s benchmark interest rate, however, is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect market borrowing rates for loans and mortgages, as well as interest paid on savings. Adjusting the LPR also allows China’s central bank to influence the exchange rates of the Chinese Renminbi.

19 private banks in China’s financial system

China permits private banks and has 19, representing only a small share of its financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest private banks, backed by technology giants Tencent and Ant Group. Domestic lenders funded entirely by private capital were allowed to enter the state-dominated financial sector in 2014.

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