China's central bank said on Tuesday that it will continue to implement a prudent and neutral monetary policy and keep liquidity in the financial system basically stable.
The People's Bank of China (PBOC) switched to a modest tightening stance at the start of this year to help cool explosive growth in debt, but it injected substantial liquidity last month to avoid a quarter-end cash crunch, market participants said.
The PBOC will use various policy tools to maintain stable liquidity and will guide reasonable growth in money supply, credit and social financing, it said in a statement summarizing the second-quarter monetary policy committee meeting.
The central bank also said that China's economic and financial operations are basically stable, but it will closely monitor changes in international capital flows.
The global economy is recovering gradually but some emerging economies still face challenges and there are "risks and hidden dangers" in international financial markets, it said.
The PBOC reaffirmed that the yuan will remain basically stable and pledged again to continue interest- and exchange-rate reforms.
In the China Financial Stability Report 2017, published on PBOC's website on Tuesday, the central bank said that economic downward pressure for 2017 is still relatively heavy and it will enhance risk-reduction measures to prevent systemic financial risk.
The PBOC said the country's shadow banking sector lacks sufficient regulation and it pledged to create a favorable monetary and financial environment for the development of the real economy this year.
