Coronavirus: China’s central bank will use ‘variety of measures’ to cut loan costs for firms
- The People’s Bank of China will use monetary tools to ensure banks have sufficient liquidity, while also implementing interest rate reforms
- Deposit benchmark rate will also be leveraged to help small businesses cope with impact of the pandemic
China’s central bank on Sunday said it would use “a variety of measures” to bring down the cost of borrowing for companies that have been hit hard by the coronavirus outbreak.
Those measures included using monetary tools to ensure banks had sufficient liquidity, and interest rate reforms, he said. It would also leverage its deposit benchmark rate so that banks could cut lending rates to help small businesses cope with the impact of the coronavirus.
Since January 31, the central bank had allocated 184 billion yuan (US$26.3 billion) of its 300 billion yuan re-lending quota – money loaned to other banks – to support firms including those making equipment needed to contain the outbreak, Sun said. Chinese banks had also issued 107.5 billion yuan in loans at favourable rates to small and agricultural firms.
Banks are encouraged to lend more – resuming work and production will require a lot of liquidity
Economic fallout from the public health crisis included weakened demand for new loans from the private sector, according to Ye Yanfei, director general of the China Banking and Insurance Regulatory Commission’s Policy Research Bureau.