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PBOC Chief - Constant calls for looser policy are making economy fragile - Reuters

  • PBOC Chief Zhou Xiaochuan explains the risks arising out of persistent loose monetary policy.

As per Reuters report, China's central bank chief has lashed out at local governments, saying their constant calls for looser monetary policy in all economic weather are the root cause of the country's financial fragility.

Key quotes/points (Source: Reuter)

"[In the good times] all industries and local governments enthusiastically pursued rapid growth and demanded [the central bank] ease money supply, as a result financing activities boomed, credit supply increased, and market players started to be overly optimistic, "generating asset price bubbles"

Zhou called for broadened equity funding and direct finance to cut corporate leverage and eliminate "zombie" companies.

Zhou said it was very difficult for regulators to find a big enough window of time to "right the wrongs".

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