HONG KONG (Reuters) – China’s central bank chief said on Monday the government will support moderately loose monetary policy to maintain ample liquidity as it tries to stimulate the economy and soften the impact of geopolitical uncertainties.
Pan Gongsheng, governor of the People’s Bank of China, said the central bank will apply various tools such as interest rates and required reserve ratio to supply liquidity in the market.
The remark underscores Beijing’s commitment to deploy what could be its most aggressive monetary tactics to revive the world’s second-largest economy.
Pan told the Asia Financial Forum in Hong Kong that the central bank will substantially increase the country’s foreign exchange reserves in the area of asset allocation in Hong Kong, without providing details.
Beijing will also support the Hong Kong Monetary Authority to use a “swap fund” scheme to replenish the liquidity of the offshore yuan market, the PBOC chief said.
The currency swap agreement currently allows Hong Kong to swap up to 800 billion yuan.
(This story has been corrected to say 800 billion yuan, not $800 billion yuan, in paragraph 6)
(Reporting by Selena Li; Editing by Kim Coghill and Christian Schmollinger)
