Tags: China | Central | Banker | Yuan | Reforms

China Central Banker: Yuan Reforms to be Gradual

Monday, 18 Oct 2010 06:58 AM

Reforms to China's yuan currency will be gradual, but the country aims to increase its flexibility, Yi Gang, a deputy head of the People's Bank of China, said on Monday.

Yuan reform will also help ease inflation pressures, he added at a news conference in Shanghai.

China has more than enough room to tighten or loosen its fiscal and monetary policies as needed, he said.

He added that the global financial crisis had taught Chinese policymakers the importance of leaving plenty of wiggle space for future policy adjustments.

"China has a large scope, whether in fiscal or monetary policies, to calmly deal with any crisis," he concluded in the article in the latest edition of Qiushi, a magazine published by the Communist Party.

"If policy tools are used to their extreme, when the government offers its help during trouble, the market will doubt its effectiveness," he said.

Yi said that China's fiscal deficit was only 2.8 percent of its gross domestic product and that national debt stood at about 20 percent of GDP, both well within the safety zone.

On the monetary front, he noted that banks' required reserve ratios were 17 percent, and that benchmark one-year interest rates were 2.25 percent for deposits and 5.31 percent for loans.

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Reforms to China's yuan currency will be gradual, but the country aims to increase its flexibility, Yi Gang, a deputy head of the People's Bank of China, said on Monday.Yuan reform will also help ease inflation pressures, he added at a news conference in Shanghai. China...
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