PBOC Governor Pan Gongsheng calls for shift from quantitative targets to price-based tools
In a signed article published in Qiushi on September 16, People's Bank of China Governor Pan Gongsheng outlined a transformation of China's monetary policy framework. He called for de-emphasizing quantitative targets like loan volumes, treating aggregate metrics as observational indicators, and relying more on price-based regulatory tools. Pan advocated improving market-based interest rate formation and transmission, refining short-term rate regulation, strengthening interest rate supervision, and rectifying "involutionary" competition and idle capital circulation in the financial sector.
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PBOC Governor Pan Gongsheng Calls for Continued Monetary Policy Framework Transformation
In a signed article published in the latest issue of Qiushi journal on September 16, People's Bank of China (PBOC) Governor Pan Gongsheng outlined plans to advance the transformation of China's monetary policy framework during the 15th Five-Year Plan period. Pan emphasized the need to adapt to changes in China's financial structure and optimize the financial system to support high-quality economic development. Key measures include reducing reliance on quantitative targets like loan volumes, treating aggregate financial metrics as observational indicators, and strengthening price-based regulation. The article calls for improving market-oriented interest rate formation and transmission mechanisms, refining short-term interest rate regulation, and enhancing the effectiveness of PBOC policy rates. Pan also stressed the importance of establishing credible policy communication mechanisms, rectifying 'involutionary' competition in the financial sector, and curbing idle capital circulation to ensure the financial system better aligns with evolving economic conditions.
Read sourcePBOC Governor Pan Gongsheng Calls for Stronger Interest Rate Supervision, Curbing Financial Sector Involution
In a signed article published in Qiushi on September 16, People's Bank of China (PBOC) Governor Pan Gongsheng outlined key priorities for transforming China's monetary policy framework. He emphasized reducing reliance on quantitative targets like aggregate lending volumes, treating them instead as observational and reference indicators. Pan called for greater use of price-based regulatory tools, improving market-oriented interest rate formation and transmission mechanisms, and refining short-term interest rate regulation. He stressed the need to strengthen implementation and supervision of interest rate policies and to persistently rectify 'involution-style' competition and idle capital circulation within the financial sector. The article also advocated for improving deposit and loan pricing to offer businesses more loan pricing benchmark options, and for establishing credible, routine policy communication mechanisms to guide market expectations effectively.
Read sourcePBOC Governor Pan Gongsheng Signals Shift Away from Quantitative Targets Toward Price-Based Tools
In a signed article published in Qiushi Journal on September 16, People's Bank of China (PBOC) Governor Pan Gongsheng outlined a significant evolution in China's monetary policy framework. He stated that the central bank will de-emphasize quantitative targets, particularly the singular focus on lending, and will treat aggregate financial metrics more as observational, reference, and expectation indicators rather than rigid goals. The article emphasizes a greater reliance on price-based regulatory tools, including improving market-based mechanisms for interest rate formation, regulation, and transmission. Pan also called for refining short-term interest rate regulation, optimizing policy rates and supporting institutional arrangements, and enhancing the role of PBOC policy rates. Additionally, he stressed the need to improve deposit and loan interest rate pricing, strengthen enforcement and supervision of interest rate policies, and rectify 'involutionary' competition and idle capital circulation within the financial sector. The governor also committed to building credible, regularized, and institutionalized mechanisms for policy communication and market engagement to ensure effective expectation guidance.
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PBOC Governor Pan Gongsheng Urges Monetary Policy Framework Transformation in Qiushi Article
An article signed by Pan Gongsheng, Governor of the People's Bank of China (PBOC), published in Qiushi Journal on September 16, calls for advancing the transformation of China's monetary policy framework to build a scientific and robust system. The article emphasizes continuously optimizing intermediate variables of monetary policy, downplaying quantitative targets, particularly reliance on loans as a single channel, and treating aggregate financial metrics as observational, reference, and expectation indicators. It advocates greater use of price-based regulation, improving market-oriented mechanisms for interest rate formation, regulation, and transmission. Specific measures include refining short-term interest rate regulation mechanisms, optimizing policy rates and supporting institutional arrangements, enhancing the effectiveness of PBOC policy rates, improving deposit and loan interest rate pricing to offer business entities more loan pricing benchmark options, strengthening enforcement and supervision of interest rate policies, and continuing efforts to rectify 'involutionary' competition and idle capital circulation within the financial sector. The article also calls for establishing a credible, normalized, and institutionalized mechanism for policy communication and market guidance.
Read sourcePBOC Governor Pan Gongsheng Calls for Reduced Emphasis on Quantitative Monetary Targets
In a signed article published in Qiushi on September 16, People's Bank of China (PBOC) Governor Pan Gongsheng outlined a shift in the monetary policy framework. He stated that the central bank should de-emphasize quantitative targets, particularly reliance on lending as a single channel, and treat aggregate financial metrics primarily as observational, reference, and forward-looking indicators. Pan advocated for greater use of price-based regulatory tools, improving market-based interest rate formation, regulation, and transmission mechanisms. He called for refining the short-term interest rate regulation mechanism and further optimizing the policy interest rate framework to strengthen the role of PBOC policy rates. The article also stressed improving deposit and loan interest rate pricing to offer business entities more loan pricing benchmark options, strengthening enforcement and supervision of interest rate policies, and continuing to rectify 'involutionary' competition within the financial sector and idle circulation of funds. Additionally, Pan emphasized establishing a credible, regularized, and institutionalized mechanism for policy communication and market engagement.