6.7167: PBOC fixes USD/CNY reference rate, compared with 6.7188 previously

6.7167 is Tuesday’s USD/CNY central rate. The People’s Bank of China (PBOC) set the fixing for the upcoming trading session against the previous day’s 6.7188 and the Reuters estimate of 6.6655.

PBOC: Key Questions Answered

The People's Bank of China: Core Responsibilities

Price stability, including exchange rate stability, and economic growth are the main monetary policy objectives of the People's Bank of China (PBoC). The central bank also seeks to advance financial reforms, including opening up and developing China’s financial market.

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 plays a key role in shaping the bank’s management and direction. The Secretary is nominated by the Chairman of the State Council. Mr Pan Gongsheng, however, currently occupies both posts.

PBoC Policy Instruments and Benchmark Rates

To meet its objectives, the PBoC draws on a wider range of monetary policy instruments than those used in Western economies. Its main tools comprise the seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). China’s benchmark interest rate, however, is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect market rates on loans and mortgages, as well as the interest paid on savings. The central bank can also influence Chinese Renminbi exchange rates through changes to the LPR.

19 Private Banks in China

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, backed by technology giants Tencent and Ant Group. Domestic lenders funded entirely with private capital were allowed to enter China’s state-dominated financial sector in 2014.

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