Zhou Xiaochuan: The registration rate and spreads control cannot be lost

In the "2009 China Financial Forum" held yesterday (December 22), central bank governor Zhou Xiaochuan revealed that China's monetary policy will always stick to four targets for implementation, namely, low inflation, economic growth, higher employment and a general balance of payments.　　The theory of "comprehensive balance of four goals" is not only the understanding of Zhou Xiaochuan's monetary policy, but also the guideline of our monetary policy implementation. Overall balance of monetary policy as the "helm" of China's monetary policy, Mr Zhou rarely talks about monetary policy in blatant situations.　　But on 22nd, on the "2009 China Financial Forum", Zhou Xiaochuan changed the habit of "digress" and expressed his own views on the goal of monetary policy implementation. Mr Zhou thought it would be appropriate for China to adopt the "four-goal balance" approach, which was also useful in overcoming the financial crisis.　　He said that China is still in the transition phase of reform, monetary policy must consider multiple objectives, but also in the current goal optimization and the degree of future optimization of the balance between the extent of the need to consider the topic dynamically.　　At present, the four main objectives of the central bank's monetary policy are to maintain low inflation, the second is to promote economic growth, the third is to maintain higher employment, more to solve new employment, and four is to maintain the balance of international payments. "Monetary policy must consider supporting resource allocation optimization, taking into account energy prices, natural resource prices, housing and public transport, such as affordable public utilities, including water price reform." Reform we have to support, and there is room for monetary policy to be made. Mr Zhou pointed out that the central bank could resist these reforms if it were simply to raise inflation targets "because they are not conducive to low inflation."　　"The 2009 Central Economic Work Conference will still be" moderately loose "for next year's monetary policy, while the centre has raised the point of managing inflation expectations, and there are still some worries about how to handle the relationship between moderately loose monetary policy and inflation.　　As for the "four goals of comprehensive balance" theory of monetary policy, the experts interviewed by daily economic news have generally thought that, in the present situation of China, it is very difficult to realize the overall equilibrium, and the key point is to highlight the key targets according to the economic situation. Pan Xiangdong, Chief macro analyst at Everbright Securities Institute, thought that four goals were in conflict. "The goal of monetary policy will only shift to controlling inflation," he said.　　"The likelihood of inflation next year is relatively small, and the need for growth is still slow, so the subsequent impetus for economic growth is the real concern," Pan Xiangdong said. "Macro-policy objectives are in line with monetary policy objectives as a whole, and it is clearly difficult to achieve an overall balance now."　　"The goal of monetary policy next year should be to maintain economic growth and improve employment," said Wu Nianru, a graduate-school professor at the central bank. But a researcher at a central bank branch of the centre told reporters that the relationship between moderately loose monetary policy and latent inflation was "due to the bigAs commodity prices rose and inflationary pressures increased, central banks are now concerned about asset prices. "Regulatory tools exaggerate the rate of registration and spreads at the forum on 22nd, Zhou Xiaochuan also noted that China is still exaggerating the role of reserve reserve rates because of imbalances in the balance of payments and foreign exchange accounts and hedging.　　At the same time, to carry out a certain regulation of spreads, because the current spreads or the bank of China to profit channels, banks need to guard against risk. "It is uncertain whether the real estate market price falls, the default, the bank can get collateral, the court's decision on the enforcement of the bank's claims and the level of space."　　Zhou said. In this respect, Wu Nianru that deposit reserve rate is an effective tool for monetary policy regulation activity. China and the United States, China's capital market is not developed, the market direct financing ratio is 20%~30%, the vast majority of financing through bank loans.　　Therefore, the freezing of bank funds by raising deposit reserve rate can effectively adjust the market activity. "Next year the central bank will still focus on using a number of means such as reserve funds to regulate the money supply, and the central bank is expected to take the lead in raising deposit reserve rates before next year's hike."　　Pan Xiangdong said that on the one hand, raising interest rates on the capital market shocks, on the other hand, if China's interest rate hike in the United States, leading to widening spreads, hot money may be a large influx. Zhou also said that after the financial crisis, the international market Financial Stability Forum and the Financial Stability Council are also adding a part of the regulatory tool, in addition to capital adequacy ratio, but also the activity ratio as a separate regulatory tool to govern, but also exaggerated the leverage ratio.