On behalf of Governor Zhou and the People’s Bank of China (PBC), I
would like to welcome everyone to the second joint PBC-IMF conference.
Last year, the PBC and IMF held a very successful conference on
capital flow management, during which experts from around the world
gave some good advice on capital account liberalization in China. Later,
the third plenum of the 18th Party Congress decided “China will promote
the opening of the capital market in both directions, increase the
convertibility of cross-border capital and financial transactions in an
orderly way and accelerate renminbi capital account convertibility.
” The
message of last year’s conference was quite consistent with what China
ultimately decided to do.
In the last seven or eight years, we have witnessed the Lehman
Brothers crisis, the European sovereign debt crisis, and recent turmoil in
some emerging market economies. Summarizing the lessons from these
crises and rethinking the framework of monetary policy and macroprudential policy are important, especially for China, a country
undergoing fast transitions in both its financial system and its overall
policy framework.
China is now in a transitional juncture as its financial sector
landscape has evolved significantly in recent years. First, market access
for private and foreign participants has been expanded to enhance
competition and provide a level playing field. Second, the surge of
“shadow banking” and internet finance has reshaped finance,
attracting
money out of the traditional system of regulated banks and contributing
to the formation of more market-based interest rates. All these changes
1
Yi Gang is Administrator of the State Administration of Foreign Exchange and Deputy
Governor of the People’s Bank of China
ii
New Issues in Monetary Policy: International Experience and Relevance for China
in economic and financial conditions call for further reform tailored to
the circumstances, especially the evolution of an overall monetary policy
framework to keep pace with the constant innovation. On the policy side,
the PBC has increased the flexibility of the renminbi (RMB) exchange rate
and advanced interest rate liberalization. Efforts are being made toward
putting in place the infrastructure for adoption of more market-based
monetary policy tools, such as developing the financial market,
promoting competition, reinforcing property rights protections,
and
improving corporate governance of financial institutions. We will advance
the reform program steadfastly according to the Third Plenum Reform
Blueprint.
Against this background, today’s conference will touch upon many
important issues related to monetary policy, such as reviewing major
economies’ experiences as they moved toward price-based tools,
discussing challenges for monetary policy frameworks in the wake of the
global financial crisis, and rethinking the coordination of monetary policy
and macro-prudential policy.
These topics are particularly important and
relevant for China to better formulate a reform plan. This conference is
also a good opportunity to share our own practices in conducting
monetary policy as well as our thinking about reforms ahead with a very
distinguished audience.
Finally, I would like to thank IMF colleagues and our PBC staff for
their efforts to organize the conference, and also everyone present today
for their contributions to the conference. I hope this conference will
contribute to reforms in China and a better understanding of China’s
circumstances globally.
