Banking

China to consider hot money policies: Report

(Agencies)
Updated: 2010-11-15 14:12

BEIJING - China may deploy a mixture of policies to fend off hot money, an official paper cited a central bank executive as saying at the weekend, amid worries that the United States' policies could create unwelcome flows of capital toward China.

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Ma Delun, a deputy governor of central bank the People's Bank of China (PBOC) told the reporter on Nov 12 that such a policy kit would include reserve requirement adjustment, management of foreign exchange positions, and open market operations.

"The 'pool' mentioned by Governor Zhou Xiaochuan does not refer to a specific market, but an array of policies," Ma was quoted as saying by the Shanghai Securities News on Saturday.

Zhou said earlier this month that China's existing foreign exchange controls were able to prevent irregular capital inflows, and proposed establishing a "pool" that could help lock and release capital as required.

Ma also said that the CPI reached a 25-month high in October was within expectations, and the central bank would improve the focus of its monetary policy in future to keep inflation in check.

The PBOC launched fresh tightening measures this week to fight excessive liquidity, including a rise in the reserve ratio for all banks. Ma said the increase in required reserves was intended to reduce money supply to the real economy.

China must continue its exchange rate reform efforts, and allow businesses to adapt by conducting reform gradually, he added.