It's normal for the central bank to "appropriately" adjust policy after excessive liquidity was created last year as the government used a moderately loose monetary policy and proactive fiscal policy to tackle the financial crisis, Xinhua said yesterday, citing Zhang's comments at a forum in Beijing.
The reserve ratio increase targeted "extra" money instead of liquidity in the real economy, and is a "neutral" tool, Zhang said, according to Xinhua.
The central bank this month unexpectedly raised the proportion of deposits that banks must set aside as reserves starting tomorrow, as a credit boom threatens to stoke inflation and create asset bubbles in the world's fastest-growing major economy.
The nation's banking regulator said Jan. 15 it will ensure loans enter the "real economy" and restrict financing to sectors that are energy-intensive, bad for the environment and facing overcapacity.
--Zhang Dingmin. Editor: Tan Hwee Ann
