(Yicai Global) Jan. 19 -- China’s central bank will bring out more policy tools to maintain stable overall money supply until downward pressure on the economy is fundamentally relieved, according to its deputy governor.

The People’s Bank of China should innovate and use structural monetary policy tools to continue bolstering credit support for small and micro enterprises, as well as technological innovation, and green development, Liu Guoqiang said yesterday. The money supply and expansion of social financing should basically match the nominal economic growth rate, he said.

The PBOC will promote the stable and moderate easing of corporate financing costs, continue to exert the effectiveness of the loan prime rate reform, maintain competition in the deposit market and stabilize the cost of bank liabilities, Liu said at a press conference.

The bank has effectively promoted a steady decline in actual lending rates by continuing to optimize LPR reform since last year, he said, adding that the annual corporate lending rate is 4.6 percent, the lowest in more than 40 years of reform and opening-up.

There is space to cut the reserve requirement ratio for lenders, though the room for adjustment has narrowed as the current level is not high, Liu said. The PBOC can cut the RRR according to the needs of economic and financial operations, as well as macroeconomic control, he noted.

Major developed economies have begun adjusting their monetary policies, which will have a limited impact on China, said Sun Guofeng, director of the PBOC’s monetary policy department.

China is still expected to grow faster than major developed economies this year, Liu said, creating the conditions for a better maintaining the macro leverage ration in the future, with the ratio remaining basically stable this year.

China’s macro leverage ratio dropped to 272.5 percent last year, down from 280.2 percent in 2020 and declining for five straight quarters, creating room for future policy changes.

The PBOC will keep the yuan's exchange rate basically stable at an appropriate and balanced level, said Sun, adding that it will actively and prudently respond to monetary policy changes in developed economies.

The hot topic of real estate also came up at the media briefing. The property sector has gradually returned to normal, and market expectations have steadily improved, said Zou Lan, director of the PBOC’s financial markets department. 

The bank will maintain the continuity, consistency, and stability of financial policies related to real estate, implementing a prudent financial management system while increasing support in the rental market, Zou added.

The briefing also touched on the topic of China’s new digital currency. The central bank will continue to steadily promote the research and development of the digital yuan, and further test it in retail transactions, utility payments, and public service scenarios, Zou said.

Editor: Emmi Laine, Xiao Yi