(Yicai Global) Oct.19 -- The "twin pillars" regulatory framework of sound monetary and macro-prudential policy is conducive to maintaining stable currency and finances, People's Bank of China Vice President Yi Gang said at the 19th Communist Party of China (CPC) National Congress.

The policy framework of central banks was centered on monetary policy before the financial crisis and they aimed to stabilize prices, which helped prevent high inflation, Yi said. This crisis showed that issues may arise from relying on monetary policy to maintain financial stability, he said.

The main sources of financial system risk are financial procyclicality and cross-market risk contagion, which macro-prudential policy can tackle, said Yi.

China previously explored combining monetary policy and macro-prudential policy by pushing regulatory framework of monetary policy to transform from quantity-orientation to price-orientation using innovative monetary policy tools, establishing a financial macro-prudential framework, Yi said.

PBOC's macro-prudential framework mainly consists of three aspects -- introducing a macro-prudential assessment (MPA) system that will monitor more financial activities and behaviors, improving counter-cyclical regulation; making cross-border capital flow under MPA supervision; and strengthening macro-prudential management in the real estate market with an emphasis on formulating differentiated housing credit policies in different cities, Yi said.