OnJanuary 1st, with the approval of the State Council, the PBCbroadened the floating range of financial institutions' lending rates. Theupper limit of commercial banks and urban credit cooperatives' lending rateswas raised to 1.7 times the benchmark lending rate, with that of rural creditcooperatives' lending rates to 2 times the benchmark lending rate, while thelower limit of financial institutions' lending rates stayed at 0.9 times thebenchmark lending rate. Floating range of lending rates will not be setaccording to the ownership or size of the financial institutions. Lending ratesof policy banks and those specified by the State Council remain unchanged.
OnJanuary 18th, the GeneralAdministration Department of the PBC published the Circular onRestricting Over Investment in Steel, Aluminum and Cement Industries, whichrequested financial institutions to comply with national industrial policies tostrengthen and improve credit management, manage credit structure, and adopteffective measures to restrict loans to overheating sectors, such as steel,aluminum and cement industries.
OnFebruary 24th, the PBC released China Monetary Policy Report of2003.
OnFebruary 25th, the PBC increased the number of primary dealers inopen market operations by approving securities companies, insurance companiesand rural credit cooperatives unions as the primary dealers. Meanwhile the PBCset up an assessment and adjustment mechanism for primary dealers in openmarket operations.
OnFebruary 26th, the Monetary Policy Committee of the PBC held ameeting on price development and monetary policy. The Committee discussed themeasurement, monitoring, analysis and judgment of inflation and its pressure,analyzed current price development and monetary policy in China, and elaboratedon the establishment of a cooperation mechanism for price monitoring system.
OnMarch 5th, the Monetary Policy Committee of the PBC held aconsultation meeting on monetary policy. The Committee reviewed currenteconomic and financial development and solicited opinions from the experts onthe system of differentiatedrequired reserve ratios and floating central bank lending rate.
On March 11th, the GeneralAdministration Department of the PBC published the Circular on EnsuringAgriculture-related Financial Services to Support Spring farming Activities,which requested the Agricultural Bank of China and the State AgriculturalDevelopment Bank to take effective measures to support farmer's spring farming activities.
OnMarch 22nd, the Monetary Policy Committee of the PBC held its firstquarterly meeting of 2004. The Committee conducted in-depth review of thecurrent macro-economic and price development, and discussed monetary policymeasures to be adopted in the period ahead and concurred that the stance ofsound monetary policy should be maintained while efforts need to be made tofurther improve the scientific, forward-looking and effective approach in the formulationof monetary policy. Money and credit growth should be properly controlled, withcredit structure to be further improved and direct financing steadily advanced.While financial support to economic growth must be guaranteed, no negligenceshould be tolerated in preventing inflation and financial risks.
OnMarch 23rd, the PBC called presidents of all commercial banks toconduct an analysis on current credit situation, and asked commercial banks toset up their own credit restriction mechanism according to their risk-controlability and capital adequacy condition.
OnMarch 24th, approved by the State Council, the PBC announced that itwould introduce the system of differentiated required reserve ratios effectiveApril 25, through which therequired reserve ratio will be raised by 0.5 percentage points for thosefinancial institutions that have capital adequacy ratios below a certain level.
OnMarch 24th, with the approval of the State Council, the PBCpromulgated the Circular of the People's Bank of China on Floating theCentral Bank Lending Rates. According to the decision, with authorizationof the State Council, the PBC could set and publish floating range for centralbank lending rates based on the benchmark rate of central bank lending(rediscount) and the macro-economic and financial development. The PBC willraise the rates of central bank lending maturing within one year that are usedfor managing financial institutions' position and providing them withshort-term liquidity support by 0.63 percentage points, effective March 25,2004. Taking central bank lending maturing within 20 days as an example, itsinterest rate would be raised to 3.33 percent by adding 0.63 percentage pointsto the current benchmark rate of 2.7 percent. Rediscount rate will be raised to3.24 percent by adding 0.27 percentage points to the current benchmark rate of2.97 percent.
On March 31st, the MonetaryPolicy Committee of the PBC held a consultation meeting on monetary policymeasures. The Committee reviewed current economic and financial situation and learnedthe response of the society to the implementation of the differentiated requiredreserve ratios system and floating the central bank lending rates.
On March 31st, the first groupof rural credit cooperatives in 272 counties (cities) subscribed to the specialcentral bank bills, which marked the smooth advance of the pilot reform programof financial support to rural credit cooperatives by the central bank.
