Stability of currency, financial system prioritized: PBOC governor

The People's Bank of China, the country's central bank, gives top priority to maintaining currency value and financial stability, Yi Gang, governor of the PBOC, said on Tuesday.

Establishing a modern central banking system is an important endeavour in the pursuit of the Chinese path to modernization. In this endeavour, the most important task for the central bank is to maintain the stability of currency value and the financial system, Yi said while addressing the 2023 Annual Conference of China Society for Finance and Banking in Beijing.

A stable yuan and financial system will promote full employment, economic growth and China's modernization drive, said Yi, who is also president of the society.

The policy goal of currency value stability includes price stability and a generally stable exchange rate, Yi said, adding the central bank's policy framework prioritizes interest rates over exchange rates as the latter is mainly determined by market forces.The PBOC's adjustments of interest rates have been "prudent with policy scope preserved", aimed at maintaining real interest rates slightly below the potential economic growth rate, Yi said.

He also remarked the country's macroeconomic indicators, such as interest, exchange and employment rates, are relatively coordinated, which can prevent systemic financial risks to a large extent. The PBOC's balance sheet expanded by about 3 percent annually in the past five years, which is relatively modest and supportive of price stability, he added.