rtmark
LearnBonds.com

China’s Central Bank supports the economy with more liquidity

The People’s Bank of China (PBOC) is committed to offering more support to the Chinese economy as the nation battles the coronavirus epidemic. It says it will lower funding costs and release more liquidity to help boost the economy that’s facing serious challenges.

The Bank’s official, Liu Guogiang, told reporters yesterday that the central bank will inject more liquidity into the economy to drive market interest rates lower.

According to Liu, “China’s monetary policy space is still very sufficient, and the toolbox is also sufficient”. He further stated that the bank is confident to minimize the effect of the epidemic on the economy.

PBOC is also releasing more liquidity to help some banks fight off the challenges facing the economy. Liu said the added liquidity will make sure there are more funds available for small business loans.

Transportation lockdowns affecting the economy

In order to curb the spread of the virus, the Chinese government carried out some transportation lockdowns, which has had significant disruptions in economic activities in the country. As a result, smaller business units are at risk of closure. They are also vulnerable since they have little cash on hand to keep their businesses flowing until this difficult phase is over.

“In the near future, there will be dynamic adjustments in targeted RRR reductions for inclusive financing,” Liu said.

Liu further hinted that the government is looking to give more banks preferential policy support when the government releases more liquidity into the system. In January last year, the Chinese apex bank released about 250 billion yuan as supplementary cash to banks, when there were assessment changes for banks.

The Bank has also reduced its bond rates considerably. And it intends to reduce lending rates, particularly for small and medium firms. It wants to do this by increasing the transmission system of the loan prime rate (LPR).

More monetary and fiscal support expected

Financial analysts are expecting the Chinese government to offer more fiscal and monetary support in the coming weeks. They pointed out that the main problem will be keeping the companies in operation until the demand for their goods and services return.

The Bank will not flood the economy

Liu pointed out that although the central bank is planning to inject liquidity into the economy, it doesn’t plan to flood the economy with excess liquidity. He added that the situation of the economy may get even worse when there are access cash chasing fewer goods. So, the bank is taking precautionary measures to provide the necessary liquidity while keeping the economy balanced.

China has reduced a lot of its key rates to cut the devastating effect of the virus-hit economy. It has urged banks to provide payment relief and cheap loans to organizations and businesses that have suffered the outbreak the most.

Trusted & Regulated Stock & CFD Brokers

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.