Fitch Ratings's Wu Sees No Significant Monetary Loosening From PBOC in 2020

The transcript discusses the People's Bank of China's (PBOC) ongoing credit support measures, including reductions in reserve requirements. Despite expectations for broader easing, significant monetary loosening is not anticipated due to bank capital constraints. The focus is on systematically important banks and potential higher capital requirements. Chinese banks face profitability pressures as they are encouraged to lower interest rates to support the economy. The balance between economic support and regulatory requirements presents challenges, with fine-tuning of policies expected to ease funding costs.

What recent action has the PBOC taken to support credit in the economy?

• Increased interest rates

• Decreased government spending

• Reduced the reserve requirement ratio

• Implemented new taxes

What is one of the main constraints against significant monetary loosening in China?

• Bank capital requirements

• High inflation rates

• Trade surplus

• Lack of foreign investment

What is the intention of the authorities regarding interest rates for banks?

• To maintain them at current levels

• To increase them to curb inflation

• To lower them to support the economy

• To eliminate them entirely

What is a potential negative impact of banks lending to smaller businesses?

• Reduced market competition

• Increased profitability

• Loans that may not be profitable

• Higher regulatory compliance

What is expected regarding regulatory policies for Chinese banks?

• Introduction of new taxes

• Massive loosening of regulations

• Complete deregulation

• Continued tightening with fine-tuning