China's central bank quietly increases its power in battle to curb risks

Beijing

CHINA'S central bank has been quietly boosting its policy independence and regulatory reach as it seeks to contain risks to the financial system, policy insiders said, to help ensure stability ahead of a five-yearly leadership team transition this year.

By greater use of market mechanisms to adjust interest rates instead of changing the official benchmark rates, which need political approval, the People's Bank of China (PBOC) has assumed more targeted, timely and effective control of its principal policy objective - to calibrate the cost of capital in the economy.

And by broadening the scope of the tools that it uses to assess and limit the accumulation of risky assets in the banking system, it has expanded its oversight powers …