Chinese Central Bank Injected 400 Billion Yuan

Chinese central bank drilled about 400 billion yuan (nearly $65 billion) to the banking system at the beginning of the January 2015. PBOC(The People’s Bank of China), which is led by the State Council, is responsible for introducing policies, setting marketing strategy, monitoring other banking and stock system, controlling exchange rate, issuing currency, and managing the treasury. There are other five state-owned banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China Limited, China Construction Bank, Bank of Communication, are taking charge of implementing the assigned policies for the society. These banks will utilized the 400 billion yuan to compensate their deposits and put more money flood to the market.

The five state-owned banks has suffered the declining profits since the PBOC has introduced a policy of cutting the interest rate down in 2014. They do not have enough deposits to satisfy the demands of the big developing market so this billions of fund will reboot the liquidity. “About 500 billion yuan in loans made in September by China’s central bank to the country’s top five state-owned banks are coming due this month. Uncertainty over whether the central bank would renew those loans has led the banks to grow wary of lending out their funds. Meanwhile, banks in China have been squeezed in recent weeks because many investors shifted their funds out of banks and into the stock market.”(http://www.wsj.com/articles/chinas-central-bank-injects-about-400-billion-yuan-into-interbank-market-1418284627?KEYWORDS=Chinese+central+bank) This time’s injection expressed central bank’s determination of solving the problem.

Moreover, China has experienced the lowest increase of its GDP during the last decade in 2014. The feeble performance of the real-estate market in China, especially in big cities, including Beijing, Shanghai, and Guangzhou, are one of the essential role. The chairman Xi Jingping’s tough attitude towards combating corruption also punched many business. People’s desire of investing and consuming are both debated. This is another pivot contribution of sluggish China’s economy.

With this 400 billion yuan, China’s state council announced to introduce the deposit-insurance system. “In disclosing plans for a deposit-insurance system, policy makers appeared to nod to rising concerns about financial risks. Deposit insurance will help maintain ‘public confidence’ in China’s banking system, said the People’s Bank of China in a statement accompanying the draft plan. The central bank, which is spearheading the effort, also said the insurance program will ensure that “risks will be discovered early and risks will arise less frequently.”(http://www.wsj.com/articles/china-releases-draft-plan-for-bank-deposit-insurance-1417340960) If the deposit-insurance system is successfully implemented, people’s credibility of saving will be dramatically increased while the competition of banking system as well as. Then, banks will attain more deposit for investments. With the 400 billion yuan, China wish its development will keep mighty in 2015.

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