People's Bank of China (PBoC)

What Is the People's Bank of China?

The People's Bank of China (PBoC) is the central bank of the People's Republic of China and is located in Beijing. The PBoC has many functions in China's monetary system, including:

• Creating and enforcing laws, rules, and regulations
• Creating and implementing monetary policy
• Managing the State treasury
• Regulating the country's financial markets
• Administering the credit reporting industry
• Performing any other functions the State Council dictates

The PBoC’s foreign exchange reserves have grown from $416 billion in 2004 to close to $3.2 trillion in mid-2022, which is the result of a consistently positive balance of payments (BOP) over the years. Its total reserves fell from $3.4 trillion in January 2022 to $2.5 trillion in mid-2022.

Understanding the People's Bank of China

The PBoC was established on Dec. 1, 1948, and is responsible for monetary policy and fiscal regulation in Mainland China. The PBoC is one of the largest central banks in the world, with over $3 trillion in foreign exchange reserves. The Huabei Bank, the Beihai Bank, and the Xibei Farmer Bank were consolidated to form the PBoC after the Chinese Communist Party's victory and the creation of the People's Republic of China.

In September 1983, the State Council decided that the PBoC should become the central bank. The bank's first headquarters were in Shijiazhuang, Hebei, and were later moved to Beijing in 1949. Between 1950 and 1978, the PBoC was the only bank in the nation and oversaw both central banking and commercial banking operations. All other banks within mainland China, such as the Bank of China, were either divisions of the PBoC or did not accept deposits.

Responsibilities of the People's Bank of China

The PBoC is responsible for drafting laws and regulations for its financial functions, including implementing monetary policy to maintain financial stability and economic growth in China. Additional responsibilities involve setting interest rates, regulating financial markets, issuing the Renminbi currency for circulation, regulating interbank lending and the interbank bond market, managing foreign exchange, and recording foreign currency transactions.

Public companies in China are funded by the PBoC. Funding for companies was previously provided through grant transfers by the state. The State-Owned Bank, under the direct supervision of the PBoC, manages grant transfer operations.

Management and Structure of the People's Bank of China

The bank is run by a board of directors. The PBoC is run by Governor Yi Gang, five deputy governors, and a chief inspector.

The PBoC has several regional branches, some of which are located in Tianjin, Shenyang, Shanghai, Nanjing, Jinan, Wuhan, Guangzhou, Chengdu, and Xi'an. In addition, there are operations offices in Beijing and Chongqing and many municipal sub-branches throughout the country.