PBOC Sets USD/CNY Reference Rate at 6.7191, Up From 6.7167 Previously

At 6.7191, Wednesday’s USD/CNY central rate for the forthcoming trading session has been set by the People’s Bank of China (PBOC), against the previous day’s fixing of 6.7167 and the Reuters estimate of 6.6855.

PBOC: Frequently Asked Questions

The People's Bank of China pursues stability and growth

Safeguarding price stability, including exchange rate stability, and supporting economic growth are the main monetary policy goals of the People's Bank of China (PBoC). Alongside these objectives, China’s central bank seeks to carry out financial reforms, including opening up and developing the financial market.

The PBoC operates under state ownership

As the PBoC belongs to the state of the People's Republic of China (PRC), it is not regarded as an autonomous institution. Rather than the governor, it is the Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, who exerts a key influence over the PBoC’s management and direction. At present, however, Mr Pan Gongsheng occupies both positions.

The PBoC deploys a broad range of policy tools

To meet its objectives, the PBoC draws on a wider range of monetary policy instruments than those used in Western economies. Its principal tools are the seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), intervention in foreign exchange markets 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 the interest earned on savings. Altering the LPR also enables China’s central bank to influence the exchange rates of the Chinese Renminbi.

Private banks account for a small share of China’s financial system

Private banks are permitted in China, where 19 operate, accounting for only a small fraction of the 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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