People's Bank Research Articles

The green premium of unconventional monetary policy: Evidence from the enlarged collateral framework by the People's Bank of China

The green premium of unconventional monetary policy: Evidence from the enlarged collateral framework by the People's Bank of China

The Current Status of Digital Currency Development in China

Abstract: Digital currencies, as innovative products in the field of financial technology, are characterized by their decentralized structure and strong encryption based on blockchain and other technologies. Although your mention of relying on local area networks may be a bit of a misnomer in the broad sense, as the operation of digital currencies relies more broadly on the Internet rather than a single local area network, the concepts of digital encryption and decentralization it emphasizes are accurate. Legal digital currencies, such as the Digital Currency Electronic Payment (DCEP) issued by the People's Bank of China, represent a milestone in this field. They not only integrate the security and transparency of blockchain technology but also achieve a perfect combination of controllable anonymity and legal tender status through the deep integration of the generalized account system with the banking system. The issuance of DCEP marks an important step forward for China in the field of digital currencies and is expected to have a profound impact on the financial market, promoting the modernization and upgrading of the payment system, enhancing transaction efficiency and security, and at the same time, providing the public with more convenient and secure payment options, further integrating into and changing people's daily lifestyles.

Digital RMB: Regulation of Central Bank Digital Currency (CBDC) in China

Introduction. “Digital RMB” is the digital currency of the People's Bank of China that has attracted the attention of researchers around the world. This project is not the first to be put into circulation, but it is the largest in terms of the volume of issued currency and the number of people using the CBDC as a means of payment.Materials and methods. The analysis of the practice of putting into effect, as well as the basics of regulating the CBDC of the PRC, can become a source of information that allows, when making a comparison, to develop a policy of action for the regulator in relation to the digital currencies of other countries.This article considers only the CBDC of the PRC, its features, technological and non-technological components. The main source of analysis is the Program Document or the Whitepaper of the CBDC of the PRC, which is currently the only official source of information on how the currency regulation is structured. This document is one of those establishing regulatory principles and is an example of a generally accepted method of regulating innovative financial technologies at the pilot stage.Results of the study. Based on the analysis, the article offers conclusions, current and final, about what the PRC CBDC is, what its structure is, what are the features and of the PRC CBDC.Discussion and conclusion. Areas of application of the PRC CBDC are being considered, the legal effect of its implementation.

Doing good in times of need: Green finance policy and strategic corporate social responsibility

This study investigates the effect of a green finance policy on the corporate social responsibility (CSR) activities of firms in heavily polluting industries. Based on the 2017 policy of the People's Bank of China (PBC), which incorporates green finance into its macroprudential assessment system, we employ the difference-in-differences method to show that firms in heavily polluting industries have significantly improved their CSR performance after the implementation of the PBC's green finance policy. In response to the negative effect of the PBC's policy on their financial position, affected firms strategically engage in CSR activities in the hope that appearing socially responsible will help them recover from their adverse position. Furthermore, firms in heavily polluting industries that enhance their CSR performance after the PBC's policy have benefited from reduced bank credit transaction costs and have obtained more bank loans. The improvement in CSR performance is mainly concentrated in firms that are non-state-owned, small in size, highly dependent on external financing, and receiving more media attention. Overall, this study reveals a social consequence of the PBC's green finance policy on the CSR performance.

The (in)effectiveness of financial consumer protection: Quasi-experimental evidence from consumer finance in China

The booming consumer finance sector has grappled with internal and external challenges, which call forth strong regulatory responses to financial consumer protection (FCP). Existing studies, however, have explored the economic consequences of FCP from a macro or meso perspective and failed to evaluate the overall effectiveness of the FCP framework. To remedy this, we collected a novel dataset from an online complaint platform in China, which included over 12,000 real-world complaints from March 2019 to September 2022. Built on the dataset, we employ a regression discontinuity in time approach to examine the effect of a representative FCP policy (i.e., Implementation Measures of the People's Bank of China for Protecting Financial Consumers' Rights and Interests) on the average rating of the consumers' perception of dispute resolution. We confirm the effectiveness of the FCP policy in improving dispute resolution, and the results remain robust for a series of tests. Moreover, the effectiveness of the FCP policy varies in different aspects of perceptions and complaint topics. The heterogeneous analysis demonstrates that first-mover and foreign-shareholding consumer finance companies are more responsive to the Measure. Finally, regulatory punishment and media attention are two channels in which FCP policy benefits consumers' perception of dispute resolution. We further discuss some important policy and managerial implications.

Study on the Tort of Misrepresentation in the Inter-bank Bond Market--Taking Case No. 1 of the Beijing Financial Court as an Example

Chinese interbank bond market dates back to June 1997, when the People's Bank of China decided to open an interbank bond trading business at the National Interbank Lending Center, which was formally established. In the following years, this market developed relatively fast, and in June 2002, the bond counter market of commercial banks began to operate, which to a certain extent made the interbank bond market, which institutional investors dominate, expand through the counter trading for all kinds of investors in the whole society.In recent years, applying direct financing tools such as corporate bond issuance has become increasingly widespread. This paper takes Beijing Financial Court Case No. 1 as an example to study in detail the important reasons for the emergence of this type of infringement, focusing on the obligations and responsibilities of each participant, including the issuer Dalian Machine Tool Group, the intermediary bank Industrial Bank, and the investor Bluestone Capital Management. This paper aims to sort out the obligations and responsibilities of each participant in the inter-bank bond market to find out the reasons for the emergence of the phenomenon of misrepresentation and to explore the issues that appear to be suitable for this paper to find out the causes of misrepresentation, explore the operation rules and risk prevention measures of the interbank bond market that are suitable for China's national conditions, to solve the problems of misrepresentation, standardize the obligations and responsibilities of all parties, and promote the development of China's interbank bond market.

Currency Internationalization, payment infrastructures and central banks: An institutional analysis of renminbi internationalization

This study explores the role of central banks in designing cross-border payment infrastructure as part of a broader agenda of currency internationalization, focusing on the Chinese experience from 2008 to 2023. Based on primary data- including descriptive statistics and interviews with senior officials from the People's Bank of China and staff from Chinese commercial banks – and triangulating information from secondary literature and official documents, the article traces the evolution of the renminbi's cross-border payment network comparing these developments with the early internationalization stages of the U.S. dollar. China's strategy is characterized as 'imitate and innovate,' where the renminbi's payment network development mirrors, to some extent, the institutional frameworks underpinning the dollar's global use. However, it also exhibits notable differences in public sector involvement and pace of development. This comparison indicates that, for late- industrializers, central bank plays a more pronounced role in jumpstarting a currency internationalization process. Moreover, this article also contributes to the international currency literature by demonstrating how payment infrastructures can aid in enhancing a country's external resilience through currency internationalization, without necessitating the complete liberalization of the capital account.

The impact of collateral-based monetary policy on green financing cost: an analysis of the People's Bank of China’s approach

ABSTRACT This paper examines the effects of the collateral-based monetary policy, implemented by the People’s Bank of China, on green financing costs. Employing a Difference-in-Differences (DID) method to examine credit spreads of financial bond in primary and secondary markets from 2017 to 2019, our findings highlight a significant decrease of 26 basis points (bps) in the financing costs of green financial bonds in the primary market, with a 12-bps decline in the secondary market post-policy. Our study underscores the crucial role of implicit credit enhancement provided by the People’s Bank of China's collateral endorsement. Interestingly, the liquidity provision mechanism, where investors pay premiums to secure liquidity support, does not find empirical backing in the specific context of China's bond market. These findings illuminate the effectiveness of collateral-based monetary policies in reducing green financing costs, offering valuable insights for using collateral strategies to green monetary policies.

Comparative Analysis of Linear Regression, Decision Tree and Gradient Boosting for Predicting Stock Price of Bank Rakyat Indonesia

An investment is the placement of a current amount of funds in the hope of generating a profit in the future. There are several types of investments, including stocks, which are attractive options as they can bring a huge return to investors. However, rapidly fluctuating stock prices are influenced by various factors, such as company performance, interest rates, economic conditions, and government policies. In Indonesia, PT Bank Rakyat Indonesia Tbk (BBRI) had the largest profit among the 10 largest banks by the end of March 2024, with a profit of IDR 13.8 trillion. The higher the bank's return, the greater the investor's interest in purchasing the stock, influencing the stock price. The goal of stock price prediction is to forecast the stock's future price in order to increase investors' potential profits. Various methods, such as Linear Regression, Decision Tree, and Gradient Boosting, have been developed for stock price prediction. Comparative analysis is needed to determine the most accurate method in predicting the stock price of People's Bank of Indonesia, using Mean Absolute Error (MAE), Mean Absolute Percentage Error (MAPE), Root Mean Squared Error (RMSE), and R-squared metrics (R2). The analysis showed that Linear Regression achieved the highest accuracy with R2 of 0.96, MAE of 65.72 and RMSE of 86.74 compared to the Decision Tree and Gradient Boosting models.

AI and big data in economic regulation: A comparative analysis of China and the United States

This paper examines the application of artificial intelligence (AI) and big data in economic regulation within China and the United States, highlighting the differing approaches and outcomes. In China, the centralized governance structure allows for the swift and uniform implementation of AI-driven strategies, optimizing government strategies, and balancing economic growth with social equity. The National Development and Reform Commission (NDRC) and the People's Bank of China (PBOC) are key players in utilizing AI to forecast economic trends and stabilize the economy. Conversely, the U.S. employs a decentralized approach, with AI applications driven primarily by the private sector and academia. The Federal Reserve leverages AI for policy decisions, while private firms use predictive models to enhance market strategies. Big data analysis supports decision-making in both nations, but differing governance structures lead to unique challenges and benefits. This study compares the centralized and decentralized systems, assessing their impact on economic performance and policy flexibility. The findings provide insights into how AI and big data can be optimized for economic regulation, offering lessons for other countries in adopting these technologies.

Shaping sustainable future: The role of central bank in galvanizing corporate ESG performance

In June 2018, the People's Bank of China (PBOC) adopted a groundbreaking initiative by including green assets as eligible collateral for the Medium-term Lending Facility (MLF). This paper utilizes this policy shift as a quasi-natural experiment to explore its effects on corporate ESG performance. Employing a difference-in-differences approach, our findings reveal a significant enhancement in the ESG scores of affected companies following the implementation of the policy. Further inquiry into the dynamics underlying this improvement suggests that the policy alleviates financing constraints and fosters green innovation and operational efficiency among these companies, thereby boosting their ESG performance.

Currency internationalization with Chinese characteristics: Is capital‐account convertibility required for the renminbi to acquire reserve‐currency status?

AbstractIt is widely assumed that the renminbi (RMB) cannot acquire a meaningful place in central bank reserve portfolios without full liberalization of China's capital account. We argue that the RMB can in fact develop into an international reserve currency in the absence of capital‐account convertibility. Trade and investment links can drive use despite limited access to Chinese financial markets. But this route to currency internationalization requires policy support. China must provide access to RMB through loans and the People's Bank of China (PBoC) currency swaps. It must ensure the convertibility of RMB into US dollars in offshore markets. It must provide RMB services at a stable and predictable price. Currency internationalization without full capital‐account liberalization thus requires the RMB to be backed by dollar reserves, which the PBoC consequently will continue to hold and use. Hence, we do not foresee RMB internationalization as supplanting dollar dominance.

Position of a Single Judge in a Small Claim Court: Role and Responsibilities

In the context of litigation, a simple lawsuit is one that has no legal recourse. It is an objection that is heard by judges who are senior in the field. This type of lawsuit is convenient for the community at large, encompassing companies, People's banks, and other banks whose proof is simple. The data collection methods employed in this research are observation, interview, and documentation. The subject of this research is the application of a straightforward lawsuit in the Jakarta District Court, specifically, the types of cases that may be resolved by such a suit. This is a qualitative study employing an empirical juridical approach, employing a descriptive methodology. This research provides a conclusion that a simple lawsuit based on Supreme Court Regulation Number 4 of 2019 represents a significant advancement over Supreme Court Regulation Number 2 of 2015. However, it was subsequently amended by Supreme Court Regulation Number 4 of 2019. The value of the lawsuit is set at IDR 500,000,000.00, with a case subscription period of 25 days. The categories of this simple lawsuit are default (breach of promise) and tort, with the exception of those concerning land issues. The application of this simple lawsuit at the Pekanbaru District Court is commendable, although a few obstacles remain. However, these do not impede the resolution of existing cases. With regard to the obstacles for judges in this simple lawsuit, namely the District Court, it is necessary to implement a more extensive socialization program to educate the public about this simple lawsuit. This will help to prevent any errors when filing a case resolved through a simple lawsuit.

THE IMPACT MODEL OF INTEREST RATE LIBERALIZATION REFORM ON THE PROFITABILITY OF STATE-OWNED COMMERCIAL BANKS: A CASE STUDY OF BANK C OF CHINA

This paper explores the definition and development of interest rate marketization in China and its impact on the profitability of state-owned commercial banks. The reform, characterized by the People's Bank of China's gradual easing of interest rate controls and expansion of the benchmark interest rate's floating range, enhanced financial market flexibility and efficiency but challenged traditional banking profit models based on interest margins. Through qualitative case studies and thematic analysis of the Bank C (China), the study finds that Bank C effectively mitigated these challenges by optimizing asset-liability management, adjusting asset and liability structures, and employing proactive risk management. These measures improved its investment returns and profitability. Additionally, Bank C’s adoption of countercyclical strategies and advancements in digital transformation and process automation helped sustain its profit model. The research concludes that Bank C's strategic adjustments enhanced its profitability and competitive edge, offering insights for other banks in similar market conditions and aiding predictions of financial market trends.

The Impact of Fed's Interest Rate Hike on RMB Exchange Rate: Based on Stepwise Regression Modelling

In the late stage of the epidemic, the Federal Reserve raised interest rates several times in a row in response to domestic inflation, which had a significant impact on the international financial environment, as exemplified by the fluctuation of the RMB exchange rate. Although several worldwide and domestic scholars have used various models to study the relationship between them, there are no studies that have used linear regression models t to clarify how the two are connected. This study uses stepwise regression on the basis of linear regression to establish an optimal model for studying RMB exchange rate fluctuations and the Fed's monetary policy adjustment, which fills this research gap. It is found that Fed rate hikes cause the RMB exchange rate to decline., while the RMB exchange rate is also negatively affected by the seven-day repo rate in China's interbank market and the People's Bank of China's foreign exchange reserves. Therefore, this study concludes by recommending that investors, Chinese foreign trade firms and People’s bank of China take appropriate measures to minimize the impact of RMB depreciation in anticipation of the Fed's interest rate hike.

The Impact of the Federal Reserve's Monetary Policy on the Bankruptcy of Silicon Valley Bank

This article analyzes the impact of the monetary policy adopted by the Federal Reserve in 2020-2022 on the bankruptcy of Silicon Valley Bank in the United States. It reveals the huge influence of the Federal Reserve's extraordinary policy direction on banking institutions, and proposes that the People's Bank of my country should learn lessons from the Federal Reserve's extraordinary monetary policy operations and avoid negative impacts.

The Influence of the Soviet Legal Model on the Law Directing the Establishment and Operation of Vietnam and China's Central Banks

The Soviet legal model significantly influenced the legal stance, operation and organization of central bank branches in China and Vietnam. According to research on the effect of the Soviet legal model on the organization and operations of the Central Bank of China and the Central Bank of Vietnam, the Soviet legal model assisted Vietnam and China in creating major legislative frameworks for the banking sector. However, the legal status of Russian banks has evolved in the direction of being more autonomous and efficient; at the same time, the People's Bank of China branch was also restructured to be more streamlined and efficient. These are the areas in which the State Bank of Vietnam has to improve in order to grow more successfully.

Penerapan Akad Murabahah di PT. BANK SYARIAH KCP MEDAN Padang Bulan

Sharia banks are currently on the rise and have become a reference for the public. One of them is 4.444 loans with a profit sharing system. Therefore, various sharia banking products, including the application of Murabahah contracts to PT financing products, must be understood by the wider community. Sharia People's Financial BANK SHARIA INDONESIA KCP MEDAN PADANG BULAN. This article explains the introduction of Murabahah contracts in PT loan products. People's Sharia Financial BSI KCP MEDAN PADANG BULAN This article uses qualitative research, collecting data through online interviews with PT manager BANK SHARIA INDONESIA KCP MEDAN PADANG BULAN. The result of this research is the application of a financing contract, namely the Murabaha contract, namely a contract for buying and selling goods at the original price with additional agreed profits. Technically, Sharia Banking Murabahah is defined as an agreement agreed between a sharia bank and a customer where the bank provides financing for the purchase of raw materials and other working capital needed by the custome.

The Influence of CRM (Customer Relationship Management) and Company Image on Customer Satisfaction and Loyalty at PT. Bank Rakyat Indonesia (Persero) Tbk Tambun Branch Office - Bekasi

Indonesian people's banks have a good reputation, such as BRI, have a high level of trust, a high level of performance, and have good business ethics. BRI also has a good personality, such as always being responsible to customers, having good achievements, having good social responsibility, and having customers with a high level of trust in Bank Rakyat Indonesia. This also makes customers loyal to do business with BRI.Discussion of the Customer Relationship Management variable (X1) and the Company Image variable (X2) on Satisfaction (Y1).a. The Influence of Customer Relationship Management (CRM) on Satisfaction.H0: b1= 0 CRM has no significant effect on customer satisfaction.H1:b1≠ 0 CRM has a significant effect on customer satisfaction.In the t test results, the Customer Relationship Management variable (X1) and the Satisfaction variable (Y1) show a significance value of 0.000 < 0.05. So it can be concluded that there is a significant influence between customer relationship management variables on satisfaction.b. The Influence of Company Image on Satisfaction.H0: b1= 0 Company image has no significant effect on customer satisfaction.H1:b1≠ 0 Company image has a significant effect on customer satisfaction.In the t test results, the Company Image variable (X2) against the Satisfaction variable (Y1) shows a significance value of 0.000 < 0.05. So it can be concluded that there is a significant influence between the company image variables on satisfaction.Discussion of the Customer Relationship Management variable (X1) and the Company Image variable (X2) on Loyalty (Y2).a. The Influence of Customer Relationship Management (CRM) on Loyalty.H0: b1= 0 CRM has no significant effect on customer loyalty.H1:b1≠ 0 CRM has a significant effect on customer loyalty.In the t test results, the Customer Relationship Management variable (X1) and the Loyalty variable (Y2) show a significance value of 0.000 < 0.05. So it can be concluded that there is a significant influence between customer relationship management variables on loyalty.b. The Influence of Company Image on Loyalty.H0: b1= 0 Company image has no significant effect on customer loyalty.H1:b1≠ 0 Company image has a significant effect on customer loyalty.In the t test results, the Company Image variable (X2) against the Loyalty variable (Y2) shows a significance value of 0.001 < 0.05. So it can be concluded that there is a significant influence between the company image variables on loyalty.

Taking P2P Online Lending as An Example

This paper is based on the critical reflection of P2P online lending, with the supervision mechanism as the main analysis Angle, credit assessment and risk prevention and control as the auxiliary to carry out the discussion of P2P online lending, hoping to provide more thinking for the future development of China's Internet + finance. The main research method adopted in this paper is case study, mainly based on typical cases at home and abroad to carry out analysis. After case analysis, the conclusions are as follows: 1. In terms of supervision mechanism: (1) Let the platform and the bank reach a commercial cooperation relationship. (2) When the debt relationship is formed, it is suggested to sign smart contracts. (3) When the debtor registers as a user on the platform, it can use the bank to evaluate the assets and liabilities. (4) The platform can also learn from the Dutch supervision mechanism for creditors on the Internet platform. 2. In terms of credit evaluation, China can build a credit evaluation system belonging to Internet finance in the credit investigation system of the People's Bank of China. 3. In terms of risk prevention and control, default records should be synchronized with banks and default costs should be raised.