Central Bank: Correctly Grasp The Connotation Of Prudent Monetary Policy &Nbsp; Control M2 Growth

In order to implement the spirit of the central economic work conference and effectively implement a prudent monetary policy,

Hu Xiaolian pointed out that we should thoroughly understand the necessity of implementing prudent monetary policy.

From moderate easing to prudent monetary policy, it is an important change in macro policy orientation and the right choice for our economy in the current international and domestic environment.

At present, the extreme turbulence of the international financial crisis has eased somewhat. The recovery of the developed economies is relatively slow and still not stable enough. Overall, the external demand situation has been improved correspondingly. China's economic growth momentum has further consolidated, and we can continue to maintain steady and rapid economic growth through the implementation of prudent monetary policy.

The return of monetary policy is conducive to strengthening the management of inflation expectations and preventing asset price bubbles.

At present, our domestic and external liquidity is abundant, inflation expectations are strong, and inflationary pressures are increasing. We need to return to prudent monetary conditions through controlling monetary policy and control the excessive price rise of monetary conditions, showing the determination to stabilize the general price level in a more prominent position and to control inflation.

The timely return of monetary policy to stability is more conducive to promoting economic structural adjustment and pformation of development mode. It helps banks adjust their credit structure, maintain pressure, help and control, rationally guide investment and consumption behavior, and provide a stable and moderate monetary environment for adjusting the economic structure and improving the efficiency of resource allocation.

Prudent monetary policy is also conducive to preventing systemic financial risks, guiding financial institutions to strengthen the adjustment of capital scale and structure, reasonably grasp the intensity of credit input, invest in and pace, control risk assets, avoid further accumulation of banking system risks, promote the steady operation of financial institutions, enhance the ability to resist risks, and enhance the sustainability of financial support for economic development.

Historically, prudent monetary policy is more flexible and targeted. It can not only tighten when the economy is hot, but also relax when the economy is cold. It helps to better handle the relationship between the three factors of steady growth, structural adjustment and anti inflation.

Hu Xiaolian suggested that we should correctly grasp the connotation of prudent monetary policy.

First of all, we must control the total amount of money.

Monetary policy changes from moderate easing to sound means.

Hu Xiaolian stressed that in the current and future period, China's financial macro-control will still face the pressure of loose liquidity at home and abroad. We must control the total gate of liquidity and guide the reasonable growth of money and credit.

2011 is the year of the opening year of 12th Five-Year, and the enthusiasm for development in all aspects is high. The pressure of monetary credit expansion on the basis of excessive liquidity is bound to be greater.

In order to do well in the next stage of macroeconomic regulation and control and maintain stable and healthy operation of the economy, the PBC will, in line with the requirements of the central government, improve its prudent policy framework and comprehensively use the price and quantity tools such as interest rates, deposit reserve ratio and open market operations to improve the effectiveness of monetary policy.

Hu Xiaolian said that in the next stage, the PBC should continue to apply various conventional monetary policy tools and further improve its monetary policy tools.

In accordance with the requirements of the Central Committee on speeding up the establishment of a framework for macro Prudential Management of the counter cyclical financial system, we should combine the total regulation of money and credit and liquidity management with a sound macro Prudential policy framework, make use of the dynamic adjustment of differential reserves, and cooperate with conventional monetary policy tools such as interest rate, deposit reserve ratio and open market business.

The dynamic adjustment of differential reserves should be further improved and standardized on the basis of original differential reserves. The adjustment is based on the extent of the total amount of social financing, the degree of deviation between the credit development of banks and the main socio-economic development goals and the specific financial institutions' influence on the whole deviation. Taking account of the importance of financial institutions and the steady development of institutions and the implementation of the state credit policy, we will more accurately recycle excess liquidity, guide financial institutions to provide loans reasonably, moderately and smoothly, optimize the credit structure, reflect the requirements of macroeconomic regulation and control, and provide the financial institutions with the initiative to follow the macro Prudential policy requirements, enhance the resilience mechanism of risk prevention ability from two aspects of raising capital level and improving asset quality, so as to prevent the accumulation of risk in the pro cyclical system.

The people's Bank of China will co-ordinate and coordinate the use of various monetary policy tools to enhance the flexibility, pertinence and effectiveness of macroeconomic regulation and control, and earnestly implement a sound monetary policy.