2016/9/20 Examples of PBoC Cutting RRR and Interest Rate Central Bank's Balance Sheet(in $BIn) for one-year lending and deposits are cut by 25 bps to 4.85 percent and 2 percent respectively Lending of other terms and kinds will also be lowered by the same margin, the announcement sai It is the third RRR reduction in nearly five months, and the China' s economic growth fell in the first quarter to 7 percent, its lowest level in six years. PBoCs Balance sheet PBoC s Balance sheet in trilion 200220032004200520052007200820092010201120122013201420 511620710315516912071227525928102945317333831 BHH4H131 101098078060703072091m1日1125 0740750901332201301.191.161.14107 0760991031631140708070形60681.100781.1415 5096187541035128416206927325912808294331713803 ,a1115H1妈1aas 05g075 1.72122432272082.86 06000090mo70c0D702701s0280180 PBoC's Balance sheet Governor of pboc 1985: Ph. D from Tsinghua Univ. 1991-1995: Deputy director of 1996-1998: Deputy Administrator of SaFe 1998-2000: Director of ccB 2000-2002: Chair of cSrc 2001-present: Governor of PBoc, Governor and professor. Chair of China Monetary Committee at does that imply for the monetary policy in China? 112016/9/20 11 Examples of PBoC’ Cutting RRR and Interest Rate – Benchmark interest rates have also been cut. Interest rates for one‐year lending and deposits are cut by 25 bps to 4.85 percent and 2 percent respectively. – Lending of other terms and kinds will also be lowered by the same margin, the announcement said. – It is the third RRR reduction in nearly five months, and the fourth round of interest cuts in nearly seven months. – China's economic growth fell in the first quarter to 7 percent, its lowest level in six years. 1‐61 Central Bank’s Balance Sheet (in $Bln) 1‐62 PBoC’s Balance Sheet in trillion Yuan 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Assets 5.11 6.20 7.87 10.37 12.86 16.91 20.71 22.75 25.93 28.10 29.45 31.73 33.82 31.78 Foreign Assets 2.32 3.11 4.70 6.33 8.58 12.48 16.25 18.53 21.54 23.79 24.14 27.22 27.86 25.38 Treasury Bonds 0.29 0.29 0.30 0.29 0.29 1.63 1.62 1.57 1.54 1.54 1.53 1.53 1.53 1.53 Credit to Commercial Banks 1.00 1.06 0.94 0.78 0.65 0.79 0.84 0.72 0.95 1.02 1.67 1.31 2.5 2.66 Credit to Other Financial Institutions 0.74 0.75 0.90 1.33 2.20 1.30 1.19 1.16 1.14 1.07 1.00 0.89 0.78 0.67 others 0.76 0.99 1.03 1.63 1.14 0.71 0.80 0.78 0.76 0.68 1.10 0.78 1.14 1.53 Liabilities 5.09 6.18 7.84 10.35 12.84 16.89 20.69 22.73 25.91 28.08 29.43 31.71 33.80 31.76 Monetary Base 4.51 5.28 5.89 6.43 7.78 10.15 12.92 14.40 18.53 22.46 25.23 27.10 29.41 27.64 Central Bank Bills 0.15 0.30 1.11 2.03 2.97 3.45 4.58 4.21 4.05 2.33 1.39 0.78 0.65 0.66 Central Government Deposit 0.31 0.50 0.58 0.75 1.02 1.71 1.70 2.12 2.43 2.27 2.08 2.86 2.27 2.72 Foreign Liabilities 0.04 0.05 0.06 0.06 0.09 0.09 0.07 0.08 0.07 0.27 0.15 0.28 0.18 0.18 Others 0.08 0.05 0.21 1.06 0.97 1.48 1.42 1.93 0.82 0.75 0.58 0.69 1.29 0.56 Net Financial Assets 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 1‐63 PBoC’s Balance Sheet 1‐64 PBoC’s Balance Sheet What accounts for the rapid raising of foreign assets? What does that imply for the monetary policy in China? 1‐65 Governor of PBoC • 1985: Ph.D  from Tsinghua Univ. • 1991‐1995:  Deputy director of Bank of China • 1996‐1998: Deputy Administrator of SAFE • 1998‐2000:  Director of CCB • 2000‐2002:  Chair of CSRC • 2001‐present: Governor of PBoC, Chair of China Monetary Policy Committee 1‐66 Governor and Professor,   Zhou Xiaochuan