6.7192: PBOC sets USD/CNY reference rate, compared with 6.7200 previously

6.7192 is the USD/CNY central rate set by the People’s Bank of China (PBOC) for Wednesday’s upcoming trading session. The fixing compares with 6.7200 on the previous day and the Reuters estimate of 6.6779.

PBOC: Key Questions Answered

People's Bank of China: Role and Objectives

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). Its remit also includes pursuing financial reforms, with the opening and development of the financial market among its aims.

PBoC Ownership and Leadership

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 who has a key influence over the central bank’s management and direction. The Chairman of the State Council nominates the Committee Secretary. Mr Pan Gongsheng currently occupies both the Committee Secretary and governor posts, however.

PBoC Policy: Principal Instruments

To meet its objectives, the PBoC deploys 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), foreign exchange interventions 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 costs for loans and mortgages, as well as interest paid on savings. The central bank can also influence Chinese Renminbi exchange rates through changes to the LPR.

19 Private Banks: China’s Private Banking Sector

China permits private banks and has 19, representing 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 enter the state-dominated financial sector in 2014.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights