China's central bank signals flexible policy tools to guide financial growth

China's central bank has signaled readiness to flexibly and efficiently deploy a range of monetary policy tools—including cutting the reserve requirement ratio and interest rates—to keep liquidity ample and guide reasonable growth in overall financial aggregates.

The pledge was made at the 2026 work conference of the People's Bank of China, held from Monday to Tuesday, which set key policy priorities for the year ahead.

The central bank also reiterated at the meeting its commitment to keeping the renminbi exchange rate generally stable at a reasonable and equilibrium level, while guarding against the risk of overshooting.

To better safeguard financial stability, the PBOC said it will establish institutional arrangements to provide liquidity to nonbank financial institutions under specific circumstances, and ensure the effective use of its two targeted monetary policy tools designed to support capital market stability.

The meeting further underscored the role of central bank currency swap arrangements in facilitating trade and investment-related use of the renminbi, and called for financial institutions to improve cross-border financial services.

Measures will also be taken to enhance infrastructure for cross-border renminbi use, encourage more eligible overseas issuers to tap the panda bond market, expand interconnection among fast payment systems, and advance cooperation on QR code interoperability.