国内英语资讯:Economic Watch: China treads carefully to tame financial cycles_时事

国内英语资讯:Economic Watch: China treads carefully to tame financial cycles

In its annual report earlier this year, the Bank of International Settlements (BIS) noted the looming risks triggered by financial expansion in several countries, saying "the main cause of the next recession will perhaps resemble more closely that of the latest one -- a financial cycle bust."

The issue is particularly relevant in China today as the country is working on a deleveraging process, while putting tough curbs on the property market to defuse risks and asset bubbles, both considered key indicators of financial cycles.

"The impact of financial cycles on the macro-economy is not short-term fluctuations, but rather mid-term ones," said Peng Wensheng, global chief economist with Everbright Securities, stressing the "pro-cyclicality," or self-reinforcing nature of both bank credit and property prices.

To better harness financial cycles, the PBOC, like many other central banks, has adopted a policy framework that involves the use of both monetary tools and macro-prudential regulation to make counter-cyclical adjustments.

Under a "twin pillar" framework, the central bank has established a macro-prudential assessment framework to regulate financial institutions, and increasingly relied on monetary tools, like open market operations for liquidity management, rather than adjustments in interest rates or reserve requirement ratios.

The twin pillar framework was emphasized in the key report delivered to the 19th National Congress of the Communist Party of China, which reiterated efforts to improve the financial regulatory system to forestall systemic financial risks.