PBOC pledges to push forward with financial reform

The People's Bank of China on Thursday reiterated its commitment to financial reform and pledged increased flexibility in managing the exchange rate and interest rates, indicating the Chinese government's determination to push forward with reform, despite concerns over the strength of the economy.

Flexibility in the yuan's fluctuation will be further boosted, allowing a bigger role for market forces in influencing the currency rate, but the basic stability of the yuan will be maintained, the central bank said in its latest quarterly monetary policy report released Thursday on its website.

The central bank also called for feasible plans to make the yuan convertible under the capital account and more efforts to expand conduits for flows of the yuan in and out of the country.

The central bank's pledge came on the heels of the State Council's announcement Monday that addressed the significance of deepening economic reform, with market-based interest rates and currency rates among the most prioritized reform targets.

The central bank also called for continued efforts to build up a deposit insurance system as a way to ward off financial risks.

Warning of uncertainties facing the economy, the central bank noted in the report that blind optimism on the inflationary outlook should be avoided, even though overall prices have seen slower growth year-on-year during the first quarter.

The central bank said it will maintain prudent monetary policy while increasing policy predictability, concentration and flexibility, indicating that there is unlikely to be a policy shift aimed at boosting the slow growth of the economy.