Chinese Central Bank Issues Macro-prudential Policy Guidelines

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The People’s Bank of China (PBOC) has issued a new set of policy guidelines for macro-prudential regulation of the Chinese financial system.

PBOC recently issued the trial implementation version of the “Macro-prudential Policy Guidelines” (宏观审慎政策指引(试行)) for the purpose of “improving macro-prudential policy governance mechanisms and raising the ability to prevent and dissolve systemic financial risk.

The Guidelines “clarify key factors for improvement to China’s macro-prudential policy framework,” as well as “demarcate relevant concepts for macro-prudential policy,” including, the macro-prudential policy framework, systemic financial risk and macro-prudential administrative work mechanisms.

The Guidelines also cover key contents of the macro-prudential policy framework, including:

  • Macro-prudential policy targets.
  • Systemic financial risk assessments.
  • Macro-Prudential policy tools, transmission mechanisms and governance mechanisms.
  • Support guarantees and policy coordination requirements that are necessary for the effective implementation of macro-prudential policy.

A PBOC spokesperson said that macro-prudential policy must be “counter-cyclical and prevent contagion,” and will play a key role in the prevention of systemic financial risk.