Key Moments
- The People’s Bank of China set Monday’s USD/CNY central parity rate at 6.7911.
- The new fixing compared with a previous central rate of 6.7939 set on Friday.
- The PBoC uses multiple policy tools, including the Loan Prime Rate, to influence funding costs and the Renminbi’s exchange rate.
Session Fixing Overview
The People’s Bank of China (PBoC) set the central USD/CNY reference rate for Monday’s trading session at 6.7911. This compares with the prior fixing of 6.7939 established on Friday, indicating a slightly stronger setting for the Chinese Yuan against the U.S. Dollar.
| Session | USD/CNY Central Rate |
|---|---|
| Friday fix | 6.7939 |
| Monday fix | 6.7911 |
PBoC Mandate and Policy Framework
The PBoC’s main monetary policy goals are to maintain price stability, which includes exchange rate stability, and to support economic growth. The central bank also focuses on advancing financial reforms, such as opening and developing the domestic financial markets.
The institution is owned by the state of the People’s Republic of China and is therefore not classified as an independent central bank. The Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council, plays a central role in shaping the PBoC’s direction and management. The article notes that Mr. Pan Gongsheng currently holds both the positions of CCP Committee Secretary and governor.
Key Monetary Policy Tools
The PBoC applies a wider range of monetary instruments than many Western central banks to pursue its objectives. Its primary tools include:
- Seven-day Reverse Repo Rate
- Medium-term Lending Facility (MLF)
- Foreign exchange market interventions
- Reserve Requirement Ratio (RRR)
In addition, the Loan Prime Rate (LPR) functions as China’s benchmark interest rate. Adjustments to the LPR affect borrowing costs for loans and mortgages, as well as returns on savings. Through changes in the LPR, the PBoC can also influence the Chinese Renminbi’s exchange rate.
Role of Private Banks in China
The article notes that private banks operate alongside state-controlled institutions within China’s financial system. It states that there are 19 private banks, with the largest being the digital lenders WeBank and MYbank, which are backed by Tencent and Ant Group, respectively, according to The Straits Times.
In 2014, domestic lenders fully funded by private capital received authorization to participate in the state-dominated banking sector.




