Banking

Central banks should encourage lending: PBOC governor

(Xinhua)
Updated: 2010-09-10 08:54

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BEIJING - Central banks should provide incentive mechanisms for banks to extend more loans to support the real economy, Zhou Xiaochuan, governor of the People's Bank of China (PBOC), or the central bank, said Thursday.

Speaking at a forum in Beijing sponsored by Oxford University and the China Development Research Foundation, Zhou reviewed the worldwide central banks' role in helping grapple with the financial crisis, pointing out that zero interest rate policies adopted in many countries could discourage banks from extending lending.

He said, however, that a central bank should maintain a certain interest rate margin, which will help banks to recover from damages brought by the global credit crunch and strengthen their abilities to extend loans.