China to improve yuan exchange rate formation mechanism
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Deputy Governor of the People's Bank of China Yi Gang said China will take further steps to improve the exchange rate formation mechanism of the country's currency, the yuan.
To promote the sound development of its financial market, China will also steadily promote the market-oriented interest rate reform, said Yi, who accompanied Chinese Vice Premier Li Keqiang during Li's visit to Spain on Jan. 4-6.
During their stay in Madrid, Yi said that China, in light of the current situation, will adopt a prudent monetary policy to let monetary conditions return to normal levels.
He also stressed the importance of China-EU financial cooperation against the backdrop of deepening globalization and the constantly-evolving world political landscape.
A strengthened coordination between China and the EU on their macro-economies and financial policies will facilitate the reform of global governance structure and is conducive to maintaining the economic and financial stability of China, the EU, and the world at large, he said.
More importantly, Yi said, the two sides need to strengthen dialogue and coordination to promote the framework for "strong, sustainable and balanced" growth around the globe as well as the reform of the global monetary system, international institutions and financial agencies.
Some issues need particular emphasis under the framework, he said, citing the impact of the Chinese and EU macro-economic policies on their respective economies and the policies' external spillover effect.
Moreover, he said, the effect of the European financial reforms, the non-conventional monetary policy measures adopted by the European Central Bank, and whether or not China could manage to flexibly exercise its macro-economic policies to address its domestic inflationary pressure are also among the hot topics.
On the reform of international institutions, Yi said the EU had made a contribution to the reform of the IMF by giving up two seats on the board to make more room for emerging economies, a move which was applauded by China and the international community.
The reform of the international monetary system will be high on the agenda of the G20 in 2011, whose rotating chair is currently held by France, an EU member.
China is ready to strengthen joint study and deliberation with the European countries, dedicating itself to the perfection of the global monetary system, pushing for the diversification of international reserve currencies and contributing to the formation of a stable reserve currency system with supplies in order and an adjustable total volume, so as to maintain the stability of the global financial system, Yi said.
