People's Bank of China

People's Bank of China
The People's Bank of China (officially PBC or informally PBOC) is the central bank of the People's Republic of China, responsible for carrying out monetary policy and regulation of financial institutions in China, as determined by the People's Bank Law and the Commercial Bank Law. It is the 25th-ranked cabinet-level executive department of the State Council.
The PBC was established in 1948 with the merger of the Huabei Bank, the Beihai Bank and Northwestern Farmers' Bank. After the proclamation of the PRC in 1949, it became the nation's central bank. In 1969, the PBC was demoted to a bureau of the Ministry of Finance, an arrangement that lasted until August 1979. The PBC was extensively reformed during the 1990s, when its provincial and local branches were abolished, instead opening nine regional branches. These reforms were reversed in 2023, when the regional branches were abolished and the provincial branches restored.
Though operating with some autonomy, the PBC lacks central bank independence, and is required to implement the policies of the Chinese Communist Party (CCP). The PBC is led by a governor, assisted by deputy governors, and the CCP Committee Secretary; both posts are currently held by Pan Gongsheng.
History
The bank was established on December 1, 1948, based on the consolidation of the Huabei Bank, the Beihai Bank and Northwestern Farmers' Bank. The headquarters was first located in Shijiazhuang, Hebei, and then moved to Beijing in 1949. Between 1950 and 1978 the PBC was the only bank in the People's Republic of China and was responsible for both central banking and commercial banking operations. All other banks within Mainland China such as the Bank of China were either organized as divisions of the PBC or were non-deposit taking agencies.
From 1952 to 1955 government shares were added to private banks to make state-private banks, until under the first Five Year plan from 1955 to 1959 the PBC had complete control of the private banks, making them branches of the PBC, closely resembling the vision of Vladimir Lenin. With aid from the Soviet Union, the shares of private enterprises and with them industrial output followed a similar path, forming a Soviet-style planned economy.
During the Cultural Revolution, the PBC suspended its commercial banking service. In 1969, the State Council approved the consolidation of PBC's headquarters as a bureau within the Ministry of Finance. Local PBC branches were merged into local government finance departments. This effective demotion of the PBC lasted for a decade until August 1979, when the PBC was separated from the Ministry.
With the exception of special allocations for rural development, the monolithic PBC dominated all business transactions and credit until 1978, when, as part of the Chinese economic reforms, the State Council split off the commercial banking functions of the PBC into four independent but state-owned banks, including the Industrial and Commercial Bank of China (ICBC), the Bank of China (BOC), the Agricultural Bank of China (ABC), and the China Construction Bank (CCB). In September 1983, the State Council promulgated that the PBC would function exclusively as the central bank of China and no longer undertake commercial banking activities.
Chen Yuan was instrumental in modernizing the bank in the early 1990s. Its central bank status was legally confirmed on March 18, 1995, by the 3rd Plenum of the 8th National People's Congress, and was granted a higher degree of independence than other State Council ministries by an act that year.
In 1996 and 1996, the PBC established fundamental regulations on loans and consumer credit.
In 1998, the PBC underwent a major restructuring. All provincial and local branches were abolished, and the PBC opened nine regional branches, whose boundaries did not correspond to local administrative boundaries.
In 2003, the Standing Committee of the National People's Congress approved an amendment law for strengthening the role of PBC in the making and implementation of monetary policy for safeguarding the overall financial stability and provision of financial services.
In 2006, the PBC established the Credit Reference Centre to provide financial credit reporting.
During the Great Recession, the PBC helped address bank liquidity crisis by signing swap agreements with numerous other countries to provide them with liquidity based on the renminbi. As of 2021, China has swap agreements with 40 countries. The PBC underwent through another major restructuring in 2023, with the abolishment of the regional arms and reopening of the previous provincial and local branches. Additionally, its county-level branches were absorbed by city-level branches. The oversight over financial holding companies and financial consumer protection was also transferred from the PBC to the newly established National Administration of Financial Regulation. The new branches were inaugurated on 18 August 2023.
Management
The PBC is a cabinet-level executive department of the State Council. The top management of the PBC are composed of the governor and a certain number of deputy governors. The governor is nominated by the premier of the State Council, who is then approved by the National People's Congress or its Standing Committee and appointed by the president.The deputy governors of the PBC are appointed to or removed from office by the premier.
The PBC adopts the governor responsibility system under which the governor supervises the overall work of the PBC while the deputy governors provide assistance to the governor to fulfill his or her responsibility. The current governor is Pan Gongsheng. Deputy governors of the management team include: Wang Huaqing, Fan Yifei, Guo Qingping, Zhang Xiaohui, and Yang Ziqiang. Former top-level managers include: Hu Xiaolian, Liu Shiyu, Li Dongrong and Jin Qi.
While operating with some degree of autonomy, the PBC does not have central bank independence and is politically required to implement the policies of the Chinese Communist Party (CCP). The CCP committee secretary of the PBC is the most powerful position in the bank and can hold more sway than the governor. The current CCP committee secretary is Pan Gongsheng.
Structure
The PBC has branches in each 31 provincial-level administrative divisions in China, branches in five cities (Shenzhen, Dalian, Ningbo, Qingdao, and Xiamen), and 317 branches in prefecture-level divisions. It has 6 overseas representative offices (PBC Representative Office for America, PBC Representative Office (London) for Europe, PBC Tokyo Representative Office, PBC Frankfurt Representative Office, PBC Representative Office for Africa, Liaison Office of the PBC in the Caribbean Development Bank).
The PBC Monetary Policy Committee is an advisory body chaired by the PBC governor. It typically includes the directors and deputy directors of other financial agencies, as well as a few influential academic economists.
Departments
The PBC consists of functional departments (bureaus) as below:
General Administration Department (General Office of the CCP PBC Committee)
Legal Affairs Department
Monetary Policy Department
Macroprudential Policy Bureau
Financial Market Department
Financial Stability Bureau
Statistics and Analysis Department
Accounting and Treasury Department
Payment System Department
Technology Department
Currency, Gold and Silver Bureau
State Treasury Bureau
International Department
Internal Auditing Department
Human Resources Department (Organization Division of the CCP PBC Committee)
Research Bureau
Credit Information System Bureau
Anti-Money Laundering Bureau (Security Bureau)
Financial Consumer Protection Bureau
Education Department of the CCP PBC Committee
CCP Committee of the PBC Head Office (Office of Inspections)
Retired Staff Management Bureau
Office of Senior Advisors
Staff Union Committee
Youth League
The following enterprises and institutions are directly under the PBC:
China Anti-Money Laundering Monitoring and Analysis Center
PBC Graduate School
China Financial Publishing House
Financial News
China National Clearing Center
China Banknote Printing and Minting Corporation
China Gold Coin Incorporation
China Financial Computerization Corporation
China Foreign Exchange Trade System
Microfinance
Rural credit cooperatives
Financial inclusion
The PBC is active in promoting financial inclusion policy and a member of the Alliance for Financial Inclusion.
Interest rates
Previously, interest rates set by the bank were always divisible by nine, instead of by 25 as in the rest of the world.
However, since the central bank began to increase rates by 0.25 percentage points on October 19, 2010, this is no longer the case.
PBC latest interest rate changes:
Reserve requirement ratio
PBC latest reserve requirement ratio (RRR) changes:
Foreign-exchange reserves
Foreign-exchange reserves from 2004:
See also
China Banknote Printing and Minting Corporation
Renminbi, the Chinese national currency
Internationalization of the renminbi
Bank of China, state-owned commercial bank
Hong Kong Monetary Authority
Monetary Authority of Macao
Central Bank of Taiwan
List of largest banks
List of microfinance banks
Notes
References
Further reading
Stephen Bell and Hui Feng. The Rise of the People's Bank of China: The Politics of Institutional Change (Harvard University Press; 2013) 384 pages; Recent history; uses interviews with key figures
External links
China, People's Republic of
Banks of China
Monetary reform
Banks established in 1948
Chinese companies established in 1948
1948 establishments in China
Companies based in Beijing