Zhou Xiaochuan, governor of the People’s Bank of China (PBoC), promised Friday to ensure there is enough money in financial markets to maintain stability after a credit crunch sparked fears of a possible crisis, his first comments since a record cash squeeze hit the world’s second-largest economy.
Addressing a financial forum in Shanghai, Zhou said:
“The PBoC will use all sorts of instruments and measures to adjust the overall liquidity level, so as to ensure the overall stability of the market.”
More from Bloomberg:
China’s growth slowdown remains in a “reasonable” range and the economy is stable, Zhou, head of the People’s Bank of China, said today in a speech at the annual Lujiazui Forum financial conference in Shanghai.
Zhou is trying to soothe concerns that the credit crunch will harm growth, saying today that he’s fully confident in the nation’s economic prospects and financial system. He reiterated points in the central bank’s June 25 statement that it will use tools to safeguard stability in money markets, after the overnight repurchase rate surged to a record high last week.
The PBOC “will use all kinds of tools to appropriately adjust liquidity in the market and maintain the overall stability of the market,” Zhou said in his first public remarks since the liquidity squeeze that sent money-market rates to the highest in at least 10 years.
The central bank will “create good monetary conditions for stable operation of financial markets and economic development,” Zhou said. Markets are “very sensitive” and will have a “fast response to any signals,” he said.
He made the points on the economy and markets at the end of a 30-minute speech devoted mostly to discussing how Shanghai can develop into a global financial center.