USD/CNY reference rate fixed at 6.7150 by PBOC, compared with 6.7146 previously

USD/CNY’s central rate for Tuesday’s upcoming trading session has been set at 6.7150 by the People’s Bank of China (PBOC). This compares with the previous day’s fixing of 6.7146 and the Reuters estimate of 6.6489.

PBOC: Key Questions Answered

What are the People's Bank of China's responsibilities?

Maintaining stable prices, including exchange rate stability, and supporting economic growth are the core 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.

How is the PBoC owned and controlled?

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, nominated by the Chairman of the State Council, who has a key influence over the central bank’s management and direction. Both positions, however, are currently held by Mr. Pan Gongsheng.

Which key policy instruments does the PBoC use?

To meet its objectives, the PBoC draws on a wider range of monetary policy instruments than those used in Western economies. Its principal tools comprise a seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), intervention in the foreign exchange market 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 rates payable on loans and mortgages, as well as the interest earned on savings. The central bank can also influence Chinese Renminbi exchange rates by adjusting the LPR.

Can private banks operate in China?

Yes. There are 19 private banks in China, accounting for only a small share of its financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest private banks, with backing from technology giants Tencent and Ant Group. China permitted domestic lenders funded entirely by private capital to operate within its state-dominated financial sector in 2014.

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