yi gang : building a modern central banking system to contribute to chinese modernization speech by mr yi gang, governor of the people's bank of china, at the 2023 annual conference of china society for finance & banking / china financial forum, beijing, 4 april 2023. * * * good morning, ladies and gentlemen! it is a great pleasure to meet so many old friends today, including mr. eddie yue, chief executive of the hong kong monetary authority ( hkma ), and to exchange ideas with you face to face. above all, on behalf of the china society for finance & banking, i would like to extend a very warm welcome to all the participants and express my sincere gratitude for your close attention and long - standing support. the theme this year is " financial sector's role in contributing to chinese modernization ", and i would like to take this opportunity to share my ideas on monetary policies, financial stability, and financial services required for establishing a modern central banking system. it was proposed, both in the fourth and fifth plenary sessions of the 19th cpc central committee as well as the 20th cpc national congress, to establish a modern central banking system. the law of the people's republic of china on the people's bank of china, first enacted in 1995 and amended in 2003, stipulates the responsibilities of the people's bank of china ( pboc ) in a concise way, stating that the pboc shall " formulate and implement monetary policies, guard against and resolve financial risks, and maintain financial stability ". it also states that " the aim of monetary policies shall be to maintain the stability of the value of the currency and thereby promote economic growth ". to this end, preserving currency stability and financial stability are two central tasks of the pboc, and a growing consensus has been reached on this point over these years. fulfilling these tasks, we will help promote full employment and economic growth, thus contributing to chinese modernization. first, preserving currency stability. currency stability has two meanings : one is to stabilize consumer prices, and the other is to keep the exchange rate basically stable. stable consumer prices and exchange rates serve to safeguard the pocketbooks of consumers, so that the money in their hands won't depreciate. fundamentally, this is a people - centered effort to safeguard the interests of the broadest possible majority of the people. in recent years, the world economy has suffered many unexpected shocks, and great uncertainty exists concerning the

. giving play to the role of monetary policy instruments in adjusting both the aggregate and the structure, we launched structural monetary policy instruments to encourage financial institutions to support key areas and weak links in the efforts to maintain stable economic growth and employment based on market principles. at present, the outstanding balance of these instruments is rmb6. 4 trillion, about 15 percent of the size of the pboc's balance sheet, which is generally moderate. we focus on two key areas, namely micro and small businesses ( msbs ) and green development. to support msbs, we began with policies to stabilize employment. since the outbreak of the covid - 19 pandemic in 2020, the pboc has provided in stages rmb300 billion, rmb500 billion and rmb10, 00 billion of central bank lending and discounts, at an increasingly more market - oriented interest rate and with an increasingly wider policy coverage. we have also launched two monetary policy instruments providing direct support for the real economy, which helped msbs to get access to loans. at the end of 2022, the outstanding balance of inclusive msb loans was close to rmb24 trillion, with their interest rates dropping from 6. 3 percent in early 2018 to 4. 9 percent, and over 56 million msbs benefited from this initiative. in order to support green development, in november 2021, the pboc launched carbon 4 / 5 bis - central bankers'speeches emission reduction facility ( cerf ), encouraging financial institutions to lend at preferential interest rates to market entities operating in key areas of carbon emission reduction. the financial institutions that received funds under this facility were required to disclose such information as the emissions reduction and the carbon footprint of projects financed by such loans. we have engaged independent third - party agencies to verify their information disclosure. the cerf helped reduce carbon emissions by 100 million tons of carbon dioxide equivalent ( tco2e ) in 2022. generally speaking, chinese modernization means new requirements for the establishment of a modern central banking system. to sum up the tasks involved, the priority is to achieve currency stability and financial stability. the fulfillment of these two tasks helps promote full employment and economic growth. next step, guided by xi jinping thought on socialism with chinese characteristics for a new era, the pboc will resolutely implement the guidelines of the 20th cpc national congress, the central economic work conference as well as the national people's congress ( npc ) and the chinese