Banking

Macro-prudential policy framework urged

(Xinhua)
Updated: 2011-06-02 11:00

BEIJING -- The time is right for China to adopt a macro-prudential policy framework in order to facilitate financial reforms in the post-global financial crisis era, the country's central bank governor said Wednesday.

Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said that China should establish the system as it strives to transform its economic growth pattern.

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Governments and financial experts have realized that they must establish a counter-cyclical market management and regulatory system, Zhou said.

"We learned from the crisis that theoretically speaking, micro-prudential systems are not always equal to macro-prudential systems," he said.

From a macro-economic perspective, governments should introduce creative counter-cyclical management systems such as counter-cyclical capital buffers and dynamic loss preparation mechanisms, he said.

The government should introduce supervision mechanisms used at macro levels, such as the supervision of shadow banks, to macro-economic management systems in order to reduce pro-cyclical effects on the economy, he added.