China central bank boss vows to maintain stability after credit squeeze
Zhou Xiaochuan says central bank will use policy to regulate liquidity, after cash squeeze
In an attempt to allay concerns about a cash crunch in the mainland banking system, central bank governor Zhou Xiaochuan pledged yesterday to maintain market stability, saying appropriate policies would be used to fine-tune liquidity.
"The central bank will make comprehensive use of policy tools and administrative measures to adjust liquidity to ensure overall market stability," Zhou told a financial forum in Shanghai. "The monetary policies are aimed at smooth operation of the financial markets and healthy economic growth."
The comments were the first public remarks about liquidity by the head of the People's Bank of China (PBOC) after a cash squeeze last week sent interbank interest rates to record highs.
The mainland leadership is determined to deleverage an economy facing increased financial risk following a multi-year lending spree and rampant issuance of wealth-management products in the so-called shadow banking system.
Zhou reiterated that authorities were comfortable with slowing economic growth and credited "prudent" monetary policies with helping to control inflation.
He said he was bullish about the country's economic growth prospects in the long term.