(Yicai Global) April 16 -- A prudent monetary policy should be neither too  loose nor too tight, and growth rates of M2 broad money and aggregate  financing to the real economy should match that of nominal gross  domestic product, according to the People's Bank of China monetary  policy committee.

This will help to steadily push forward reforms in key areas such as  interest rates, and further dredge the transmission channels of monetary  policy, the central bank said in a statement following a regular  quarterly meeting on April 12. 

China's aggregate financing to the real economy rose 10.7 percent annually to  CNY208.4 trillion (USD31.1 trillion) in the first quarter while that of  M2 increased 8.6 percent.

The PBOC monetary policy committee believes that the yuan exchange rate is  generally stable and expectations on the financial market have improved.  Its ability to cope with external shocks has also been boosted. The  prudent monetary policy reflects requirements of a counter-cyclical  adjustment, the macro leverage ratio tends to be stable, financial risk  prevention and controls have become more effective, and the quality of  finance that serves the real economy has gradually improved.

The structural adjustments in China's economic and financial sectors have  undergone positive changes, though some deep-seated problems and  prominent contradictions still exist. The international economic and  financial situation is complicated and uncertain, the committee added.

The PBOC will pay close attention to marginal changes in international and  domestic economic and financial situations, adhere to counter-cyclical  adjustment, further strengthen the coordination between monetary, fiscal  and other policies, target preemptive adjustments and fine-tuning in a  timely manner, as well as focus on preventing risks based on a steady  growth.

The central lender also aims to adapt financial support for private  enterprises so it corresponds to private enterprises' contribution to  economic and social development while also further expanding the  high-level and two-way financial opening-up. 

It will also strengthen the management as well as risk prevention and  control mechanisms of the economy and finance sector while participating  in international financial governance. 

Editor: William Clegg