Pan Gongsheng, the Governor of the central bank, said: "Currently, the average reserve requirement ratio for banks in China is 7%. There is still room for further reserve requirement ratio cuts in the future."

On March 5, President Pan Gongsheng answered questions from reporters at the Economic Theme Press Conference of the 14th National People's Congress. Pan Gongsheng pointed out that currently, the average reserve ratio of the entire Bank of China industry is 7%, and there is still room for further reserve ratio cuts. We will comprehensively use various monetary policy tools, increase countercyclical adjustment efforts, maintain reasonable and adequate liquidity, support stable growth in social financing scale and total monetary credit volume, balanced deployment, and achieve the matching of the scale of social financing, broad money supply and economic growth with price level expectations. The original text is as follows: President Pan Gongsheng answered questions from reporters on the economic theme at the 14th National People's Congress Second Conference The 14th National People's Congress Second Conference will hold a press conference at 3:00 pm on Wednesday, March 6, 2024, at the Media Center Press Room of the National Convention Center. Zheng Zhijie, director of the National Development and Reform Commission, Lan Fu'an, Minister of Finance, Wang Wentao, Minister of Commerce, Pan Gongsheng, President of the People's Bank of China, and Wu Qing, Chairman of the China Securities Regulatory Commission, will answer questions from Chinese and foreign reporters on issues related to development and reform, financial budget, commerce, finance, and securities. The following is the transcript of President Pan Gongsheng's Q&A: People's Daily reporter: I would like to ask Mr. Pan Gongsheng, President of the People's Bank of China. This year, the intensity of reserve ratio cuts and the decline in loan interest rates have exceeded market expectations. In the next stage, how will monetary policy continue to support economic recovery and improvement? Thank you. President of the People's Bank of China Pan Gongsheng: Thank you for your question. The People's Bank of China has always maintained good communication and interaction with the media in an open and professional manner, and I would like to express my sincere gratitude to the media friends for their attention, supervision, and support for the work of the central bank. The direction of China's monetary policy has always been a topic of great concern. In January, during the press conference of the State Council Information Office, I had exchanged views on this issue with reporter friends. I would like to take this opportunity today to further clarify the central bank's position and views on monetary policy. Regarding the operation of China's macro economy, Director Zheng Zhijie of the NDRC just explained it very clearly. Our country's economy is recovering and improving in quality. However, the domestic and international situation is still complex and changing, requiring combined policy efforts to increase the policy intensity of macroeconomic regulation. China's monetary policy toolbox is still rich, and there is still enough room for monetary policy. In our monetary policy regulation, we will pay more attention to balancing short-term and long-term, stable growth and risk prevention, internal and external balance, strengthening counter-cyclical and cross-cyclical adjustments, boosting confidence, stabilizing expectations, stabilizing prices, and creating a good monetary and financial environment for economic operation and development. Main considerations include: First, maintaining reasonable growth in overall quantity. The People's Bank of China lowered the reserve requirement ratio twice last year, each time by 0.25 percentage points; on February 5 this year, we further lowered the reserve requirement ratio by 0.5 percentage points, which released 1 trillion yuan of long-term liquidity. Currently, the average reserve ratio of the entire Bank of China industry is 7%, and there is still room for further reserve ratio cuts. We will comprehensively use various monetary policy tools, increase countercyclical adjustment efforts, maintain reasonable and adequate liquidity, support stable growth in social financing scale and total monetary credit volume, balanced deployment, and achieve the matching of the scale of social financing, broad money supply and economic growth with price level expectations. Second, in terms of price, we will continue to promote the stabilization and reduction of the overall social financing cost. In 2023, we reduced interest rates twice and lowered the interest rates on outstanding mortgage loans, guiding major banks to lower deposit interest rates. In February this year, we also guided a 0.25 percentage point decrease in the market quoted loan interest rates for loans of 5 years or more. As you know, the quoted interest rate for loans of 5 years or more is the pricing benchmark for individual mortgages and long-term investments. These measures will effectively promote the reduction of the overall social financing cost and support investment and consumption. We will consider maintaining price stability and promoting moderate price increases as important factors in monetary policy, coordinate the health of the balance sheets of banking assets and liabilities, and continue to promote the stabilization and reduction of the overall social financing cost. Third, in terms of structure, we must focus on improving efficiency. Further enhance the effectiveness of monetary policy in promoting economic structural adjustment, transformation and upgrading, and the shift from old to new growth drivers. We will establish technology innovation and technological transformation refinancing, continue to implement support for carbon reduction refinancing, play a good incentive role for structural monetary policy tools, guide financial institutions to scientifically assess risks, constrain the financing supply to industries with excess production capacity, and more targetedly meet reasonable consumption financing needs. Revitalize the stock of financial resources and focus on improving the efficiency of fund use. Fourth, in terms of exchange rate, we will maintain the basic stability at a reasonable and balanced level. In the past period, we have adhered to the market supply and demand as the basis, and adopted a series of macro-prudent management measures to maintain the basic stability of the RMB exchange rate in a complex situation. This year, the monetary policies of major economies are expected to shift, and the momentum of the US dollar index is weakening. Please note, in the past few days, the US dollar index has dropped from around 104 in the previous week to around 103 these days, and the gap in monetary policy cycles between domestic and foreign markets is converging. China's economic fundamentals continue to improve, and the participants in the foreign exchange market are becoming more mature, with more and more businesses using exchange rate hedging tools and using the renminbi for cross-border settlement. As of February, the proportion of settlement in renminbi in all cross-border goods trade in China is close to 30%. The combined effect of these factors objectively helps enhance the operational space of our monetary policy, which is conducive to balancing cross-border capital flows and maintaining the basic stability of the RMB exchange rate. The People's Bank of China will implement the central government's decisions and arrangements with a professional and pragmatic spirit, and the prudent monetary policy will be flexible, moderate, precise, and effective. We will adhere to the fundamental purpose of serving the real economy, increase macro control efforts, strengthen dual adjustments in quantity and structure, consolidate and enhance the positive trend of economic recovery and improvement, and continue to promote high-quality development. Thank you. Daily Economic News reporter: I would like to ask President Pan of the People's Bank of China this question. Regarding focusing on the "five major articles" of technology finance, green finance, inclusive finance, pension finance, and digital finance, how will the People's Bank of China...How was this considered? Thank you. ;; Based on meeting the demands of the market, the Chinese yuan will continue to improve its cross-border use system arrangements and financial infrastructure construction. Its international functions in yuan payment settlement, investment and financing, and international reserves continue to strengthen, and the yuan has already begun to exhibit network effects for international use. Currently, the yuan ranks as the fourth most used payment currency globally, the third most used trade financing currency, and the fifth most used foreign exchange trading currency. In the next step, the People's Bank of China will adhere to a market-driven and voluntary basis, continuously improve cross-border yuan policies, enhance the yuan cross-border payment system, optimize the global layout of yuan clearing banks, strengthen monetary cooperation with foreign currency authorities, and steadily promote the healthy development of the offshore yuan market.The People's Bank of China is firmly committed to maintaining Hong Kong's status as an international financial center. On the basis of the six policies and measures of "three connectivity, three facilitation" introduced earlier this year, we will continue to deepen financial cooperation between the mainland and Hong Kong, strengthen Hong Kong's functions as an international financial asset management center and risk management center, and support Hong Kong in building a financial technology hub and sustainable financial center in the Asia-Pacific region. We will continue to strongly support the construction of the Shanghai International Financial Center and the expansion of high-level financial openness, deepen cross-border trade and investment facilitation measures, and support Shanghai in building a global center for renminbi financial asset allocation and risk management. The third key focus is to create a more friendly and inclusive business environment. We will continue to improve payment services. In the modern retail payment system, there have been three generations of payment tools: cash, bank cards and checks, and mobile and online payments. The rapid development and popularization of mobile and online payments in China has undoubtedly played an important role in improving transaction efficiency, reducing transaction costs, and increasing financial inclusiveness, becoming a highlight of China's financial development. However, it has also brought some problems, such as inconvenience for some elderly people and foreign nationals living in China in terms of payments. The People's Bank of China will implement the recently issued "Opinions on Further Optimizing Payment Services and Enhancing Payment Convenience" by the State Council, and work together with relevant government departments, commercial banks, payment institutions, and bank card organizations to improve the acceptance environment for bank cards, optimize cash payment services, and enhance the convenience of mobile payments through methods such as expanding the use of international cards for domestic use. Focus on specific regions, venues, and merchants to achieve significant results in a short period of time. The People's Bank of China, together with other financial regulators, is optimizing the system arrangements for cross-border financial data flows. Last year, relevant national departments formulated the "Regulations on Promoting and Standardizing Cross-border Data Flow" and have publicly solicited opinions. The People's Bank of China, together with other financial regulators, is optimizing the management of cross-border financial data flows, compiling a directory of important financial data, unifying regulatory compliance criteria, providing clear guidelines to financial institutions, and making future cross-border financial data flows more standardized and convenient. The fourth key focus is to coordinate financial openness and security. We will continue to strengthen communication and cooperation with international financial organizations and major central banks, actively participate in global financial governance and policy coordination, consolidate the global and regional financial safety net, and build a "financial bridge" for trade and investment between China and other countries. At the global level, we will continue to promote the reform of International Monetary Fund quotas and construct a more fair and reasonable global financial governance framework. At the regional level, we will steadily promote cooperation with ASEAN countries, Japan, South Korea, and the Chiang Mai Initiative multilateralization, and increase the use of freely convertible currencies in the region. At the bilateral level, we will implement the important outcomes of the meeting between the leaders of China and the United States, and prudently promote key issues of the China-U.S. Financial Working Group. Actively promote the work of the China-EU Financial Working Group and deepen financial cooperation with major countries in the region. We will continue to enhance financial security under conditions of openness, strengthen the monitoring, assessment, and early warning of cross-border financial risks, and safeguard national financial stability and security. We will improve the scientific and comprehensive financial legal system, accelerate the legislative revisions and amendments of laws such as the Financial Stability Law, Anti-Money Laundering Law, and Foreign Exchange Management Regulations. The development experience of the Chinese financial market shows that expanding opening up is a powerful driving force and important guarantee for the high-quality development of finance, and a key measure to enhance the service capacity and international competitiveness of the real economy. We will continue to resolutely carry out all the work of financial opening up. Thank you.