PBOC Governor Pan Gongsheng: Downplay focus on quantity targets like loans, treat aggregate financial data as observational indicators
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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.
Source report
Jin10 Data, September 16 — On September 16, Qiushi published a signed article by Pan Gongsheng, Governor of the People's Bank of China (PBOC), titled "Deeply Understanding Changes in China's Financial Structure and Enhancing the Suitability of Financial Services for the Real Economy."
The article outlined several key policy directions:
- Monetary Policy Framework Transformation: Efforts should continue to advance the transformation of the monetary policy framework and build a scientific and robust monetary policy system.
- Optimization of Intermediate Variables: Intermediate variables of monetary policy should be continuously optimized, with reduced emphasis on quantitative targets — particularly reliance on lending as a single channel. Aggregate financial metrics should instead serve primarily as observational, reference, and forward-looking indicators.
- Greater Use of Price-Based Tools: Greater attention should be given to leveraging price-based regulatory tools and improving market-based mechanisms for interest rate formation, regulation, and transmission.
- Short-Term Rate Regulation: The short-term interest rate regulation mechanism should be refined, along with further optimization of the policy interest rate framework and supporting institutional arrangements, thereby strengthening the role of the PBOC's policy rates.
- Deposit and Loan Pricing: Pricing of deposit and loan interest rates should be improved to provide business entities with more options for loan pricing benchmarks.
- Supervision and Competition: Enforcement and supervision of interest rate policies should be strengthened, with ongoing rectification of "involutionary" competition within the financial sector and idle circulation of funds.
- Policy Communication: A credible, regularized, and institutionalized mechanism for policy communication and market engagement should be established, employing professional and pragmatic approaches to effectively communicate policies and guide expectations.
Source
金十数据Eastern
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PBOC Governor Pan Gongsheng calls for shift from quantitative targets to price-based tools