More details in stimulus financing
A raft of measures to encourage lending by financial institutions to infrastructure projects, small businesses and potential home and car buyers was unveiled by the government the day before yesterday.
Also, the three policy banks will get 100 billion yuan ($14.6 billion) from the government to prop up economic growth during the worsening global financial crisis.
When chairing an executive meeting of the State Council, or the Cabinet, Premier Wen Jiabao also said they will take steps to help economy over the crisis.
The meeting said that banks, securities firms and insurers should take coordinated action to do more in supporting economic growth and contributing to industrial restructuring.
It is urgent to implement a “pro-active fiscal policy” and “a moderately easy monetary policy” in the global financial crisis; and the financial sector should play a far more important role in economic development, said the meeting.
Four measures below are among the nine which were announced to boost the role of the financial sector in the economy.
- Urge commercial banks to meet the demand for loans from severely hurted SMEs, investors in the countryside as well as home and car buyers.
- Expand the issue of treasury bonds.
- Allow insurance companies to invest in major infrastructure projects.
- Use exchange and interest rates and the bank reserve requirement ratio to ensure liquidity in the banking system.
Analysts believe the move is part of the government’s answer to how the stimulus package, which was announced on Nov 9, will be financed.
The central government said last month it would provide 1.18 trillion yuan, or 30 percent, while the rest will be made up by local governments and enterprises.
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