04 Governor’s Address 75 BANKNOTE ISSUANCE AND MANAGEMENT 07 MANAGEMENT OF THE PEOPLE’S BANK OF CHINA 79 MANAGING THE TREASURY 10 MEMBERS OF THE MONETARY POLICY COMMITTEE OF 84 FINANCIAL TECHNOLOGY THE PBC 87 CREDIT INFORMATION AND THE SOCIAL CREDIT SYSTEM 11 ORGANIZATIONAL STRUCTURE OF THE PBC 90 ANTI-MONEY LAUNDERING AND COMBATING 14 GLOBAL ECONOMIC AND FINANCIAL DEVELOPMENTS THE FINANCING OF TERRORISM 17 CHINA’S MACRO-ECONOMY 93 PROTECTION OF THE RIGHTS AND INTERESTS OF 22 CHINA’S FINANCIAL PERFORMANCE FINANCIAL CONSUMERS 26 MONEtaRY POLICY 97 INTERNATIONAL FINANCIAL COOPERATION AND 33 CREDIT POLICY RULE-MAKING 40 FINANCIAL LEGISLATION 105 MAINLAND FINANCIAL COOPERATION WITH THE 43 FINANCIAL Stability HONG KONG, MACAO, AND TAIWAN REGIONS 45 FINANCIAL REFORM 107 HUMAN RESOURCES 51 FINANCIAL MARKET 110 INTERNAL AUDITS 59 RMB INTERNATIONALIZATION 112 FINANCIAL INVESTIGATIONS AND STATISTICS 64 FOREIGN EXCHANGE ADMINISTRatiON 115 FINANCIAL RESEARCH 67 FINANCIAL ACCOUNTING 121 PUBLIC COMMUNICATIONS AND EDUCATION 69 PAYMENT SYSTEM COLUMNS 29 The Macro-Prudential Assessment System 73 Steadily Opening Up the Bankcard Clearing Market 31 The PBC Continued to Improve the RMB Exchange-Rate Regime 95 The G20 Promoted the Development of Financial Inclusion 36 Boosting Financial Aid for Targeted Poverty Alleviation in an 100 The Chinese RMB is Officially Included in the SDR All-round Manner 102 Selected Results under the Finance Track of the G20 49 Revision of the Articles of Association for Development Financial Hangzhou Summit Institutions and Policy Banks 118 Green Finance Entered the Fast Track of Development 57 The Shanghai Commercial Paper Exchange 62 The Mutual Stock Market Access Mechanism between Shenzhen and Hong Kong (Shenzhen-Hong Kong Stock Connect) CONTENTS STATISTICAL ANNEX 144 FINANCIAL MARKET StatiSTICS 123 SELECTED ECONOMIC INDicatORS 144 Money Market Statistics, 2016 125 AGGREgatE FINANCING TO THE REAL ECONOMY 144 Bond Market Statistics, 2016 125 Aggregate Financing to the Real Economy (Increment) 145 Stock Market Statistics, 2016 125 Aggregate Financing to the Real Economy (Stock), 2016 145 Securities Investment Funds Statistics, 2016 126 Aggregate Financing to the Real Economy (Increment), 145 Futures Market Statistics, 2016 2016, by Area 146 Insurance Market Statistics, 2016 127 SELECTED FINANCIAL INDicatORS 146 Gold Market Statistics, 2016 128 MONEtaRY StatiSTICS 128 Depository Corporations Survey, 2016 147 BALANCE OF PaymENTS, EXTERNAL DEBT POSITION, 129 Balance Sheet of the Monetary Authority, 2016 RMB EXCHANGE RatE, ETC. 130 Balance Sheet of Other Depository Corporations, 2016 147 RMB Exchange Rate 131 Balance Sheet of Large-sized Domestic Banks, 2016 147 Official Reserve Assets, 2016 132 Balance Sheet of Medium-sized Domestic Banks, 2016 148 China’s Balance of Payments, 2016 133 Balance Sheet of Small-sized Domestic Banks, 2016 150 China’s External Debt Position, 2016, by Sector 134 Balance Sheet of Foreign-funded Banks, 2016 135 Balance Sheet of Rural Credit Cooperatives, 2016 151 RMB INTERNatiONalizatiON 136 Balance Sheet of Finance Companies, 2016 151 Statistics on RMB Cross-Border Payments and Receipts 137 Monetary Aggregates, 2016 151 RMB Financial Assets Held by Overseas Institutions and 138 Statistics on the Volume of RMB Issuances Persons 139 Business Statistics on Non-cash Payment Operations 140 Statistics on Transactions via Payment Systems 152 FLOW OF FUNDS StatEMENT, 2015 141 Statistics on the Number of Bank RMB Settlement Accounts 156 FLOW OF FUNDS, 2015 141 Statistics on the Number of Bankcards 162 CHRONICLE 142 INTEREST RatES 180 MAJOR RULES AND ADMINISTRATIVE DOCUMENTS 142 RMB Interest Rates, 2016 PROMULGATED IN 2016 143 Interest Rates on Small-value USD Deposits 143 Shibor Monthly Average Rates, 2016 04 THE PEOPLE’S BANK OF CHINA 2016 Annual Report Governor’s Address In 2016, the international situation was implemented so as to enhance counter- volatile and complex, with instabilities and cyclical adjustments. The PBC made uncertainties looming large. The overall continued efforts to bring into full play the domestic economic performance stabilized positive incentive role of the targeted RRR and turned for the better and economic cut and made reasonable arrangements restructuring accelerated. However, the for central-bank lending to support the economy was still facing inadequate agricultural sector, small and micro-sized endogenous growth drivers, imbalances enterprises, and poverty alleviation so as to between overcapacity and upgrading of further improve the credit structure. The PBC the demand structure, and the build-up further refined the financial management of financial risks. Under the leadership of policy framework with the two pillars of the Central Committee of the Communist “monetary policy + macro-prudential policy” Party of China (CPC) and the State Council and created an appropriate money and and adhering to the guideline of seeking financial environment for stabilizing growth progress while maintaining stability, the and promoting supply-side structural reform. PBC continuously improved macroeconomic By end-2016, the supply of broad money management, comprehensively deepened had risen by 11.3 percent year on year and financial reforms, and effectively prevented incremental all-system financing aggregates financial risks, achieving an energetic good had reached RMB17.8 trillion. start for the 13th Five-Year Plan. Financial support for supply-side structural The sound monetary policy was better reform produced results targeted and more effective While making efforts to appropriately Given the changing structure and the expand aggregate demand the PBC supply and demand of liquidity in the earnestly promoted financial support for the banking system, the PBC adopted a mix of supply-side structural reform. To reduce policy instruments, including open market excess capacity, the PBC made concerted operations, liquidity adjustment instruments, efforts to provide financial services to reduce and a reserve requirement ratio (RRR), to capacity in the steel and coal industries and maintain adequate liquidity. The differentiated to bring about a smooth corporate debt and dynamic reserve adjustment mechanism financing transition in these industries. To was “upgraded” to a macro-prudential reduce overstocking, the PBC improved city- assessment (MPA) mechanism, and full specific mortgage policies and strengthened coverage of macro-prudential regulation of regulation of real estate financing in key cross-border financing was comprehensively cities so as to support the reasonable THE PEOPLE'S BANK OF CHINA 2016 Annual Report 05 housing demands of residents. To reduce performing assets and real estate investment leveraging, the PBC played an active role trust funds, to expand the pool of issuers in designing deleveraging policies and in and the issuance size of panda bonds, and guiding commercial banks to carry out debt- to allow more foreign investors to access equity swaps in a market-oriented manner the market and to remove their investment and in compliance with the law. To lower limits. The Shenzhen-Hong Kong stock- financial costs for enterprises, in a timely connect was launched based on joint efforts manner the PBC lowered the interest rates by the relevant authorities, and the pilot of of the medium-term liquidity facility (MLF) so the Shanghai-Hong Kong stock-connect as to guide market rates downward and it was further optimized. The top-down properly expanded corporate bond financing systemic design of the commercial paper so as to lower corporate financing costs. To market made progress and a centralized address the weak points in the economy, national commercial paper trading platform the PBC improved the targeted poverty was established. The launch of Shanghai alleviation policy system and promoted Gold RMB-denominated centralized pricing financial support for economic development enhanced China’s influence on gold pricing and social stability in the poverty-stricken in the international market. and economically-backward regions. Steady progress was made in preventing Financial reform and the opening-up and mitigating financial risks made headway Facing financial vulnerabilities and the The PBC has been enhancing the vitality frequent onset of financial risks, the PBC, as and dynamism of financial development a leading agency, focused on coordinating by deepening the reform and opening-up. financial risk prevention and mitigation The market-based reform of the RMB policies in key areas, improved regulatory exchange-rate regime was promoted to arrangements for cross-market and cross- make it more rule-based, transparent, and sector financial services and various market-oriented. Integrated management comprehensive businesses, worked on of both domestic and foreign currencies in formulating normative standards for asset cross-border capital flows was strengthened management businesses, and organized and and the trade and investment facilitation conducted a special rectification campaign reform was deepened. Reform plans for on internet financing risks. An assessment of development and policy financial institutions deposit insurance risks was carried out and the were implemented to strengthen their roles rating results were applied. Relevant research and functions. Efforts were made to launch was conducted to improve risk recognition convertible second-tier capital bonds, SDR- and an early rectification mechanism for the denominated securities, and other products deposit insurance