PBOC’s USD/CNY reference rate set at 6.7165, compared with 6.7171 previously

The USD/CNY central rate for the upcoming trading session is fixed at 6.7165 by the People’s Bank of China (PBOC) on Wednesday, against the previous day’s fixing of 6.7171 and the Reuters estimate of 6.6734.

PBOC: Frequently Asked Questions

What is the role of the People's Bank of China?

Maintaining price stability, including exchange rate stability, and supporting economic growth are the core monetary policy goals of the People's Bank of China (PBoC). Its mandate also includes pursuing financial reforms, such as opening up and developing China’s financial market.

How is the PBoC owned and managed?

State ownership by the People's Republic of China (PRC) means the PBoC is not regarded as an autonomous institution. Rather than the governor, it is the Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, who plays a key role in shaping the PBoC’s management and direction. Both positions are currently held by Mr Pan Gongsheng.

Which key instruments does the PBoC use to implement policy?

To meet its policy goals, the PBoC draws on a wider range of monetary instruments than those used in Western economies. Its main tools comprise a seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), interventions in the foreign exchange market and the Reserve Requirement Ratio (RRR). China’s benchmark interest rate, however, is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect market borrowing rates for loans and mortgages, as well as the interest earned on savings. The central bank can also influence Chinese Renminbi exchange rates by adjusting the LPR.

Can privately owned banks operate in China?

Yes. With 19 private banks, China’s private banking segment accounts for only a small part of its financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest private banks, backed by technology giants Tencent and Ant Group. Domestic lenders funded entirely by private capital were permitted to operate in China’s state-dominated financial sector in 2014.

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