China needs to innovate monetary policy tools
- A prudent monetary policy must be flexible, reasonable and appropriate, adhere to the primary goal of currency stability.
- China's M2, a broad-based measure of money supply, in December grew 10.1% from a year earlier, below estimates of 10.5% forecast.
HONG KONG: China needs to innovate its monetary policy tools and improve the transmission mechanism to strengthen its international macroeconomic policy coordination, a central bank official said in a research report on Wednesday.
"A prudent monetary policy must be flexible, reasonable and appropriate, adhere to the primary goal of currency stability," Sun Guofeng, head of the monetary policy department of the People's Bank of China (PBOC), said in the report published on the bank's website.
Policy also needed to further improve the central bank's long-term mechanism for regulating liquidity, capital and interest rates, Sun said.
China's M2, a broad-based measure of money supply, in December grew 10.1% from a year earlier, below estimates of 10.5% forecast in a Reuters poll.
The PBOC reiterated it would not resort to "flood-like stimulus" and would prioritise stability in monetary policy in 2021.
Keeping the money supply and growth rate of social financing matched with nominal economic growth rates was a medium-and long-term goal to maintain the stability of the monetary policy, Sun added.
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