USD/CNY reference rate set at 6.7162 by PBOC, compared with 6.7180 previously

The USD/CNY central rate for Monday’s trading session is set at 6.7162 by the People’s Bank of China (PBOC), against Friday’s fixing of 6.7180 and the Reuters estimate of 6.6691.

PBOC: Frequently Asked Questions

What is the role of the People's Bank of China?

Maintaining 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.

How is the PBoC owned and managed?

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 on the bank’s management and direction. Both positions, however, are currently held by Mr. Pan Gongsheng.

Which key instruments does the PBoC use to implement policy?

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

Can private banks operate in China?

Yes. With 19 private banks, China’s private banking segment accounts for 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 permitted to operate in China’s state-dominated financial sector in 2014.

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