The Covid-19 pandemic has fanned pubic concern the coronavirus can be transmitted by cash, potentially speeding up the shift toward digital payments, according to researchers at the Bank for International Settlements (BIS).
Central banks have reported a jump in the number of inquiries from the media regarding the safety of using cash, and the number of internet searches pertaining to "cash" and "virus" are at record highs, three staff members of Swiss-based BIS said in a bulletin from April 3.
Scientists find some viruses can persist for hours or days on banknotes but the virus seems to survive best on non-porous materials, such plastic or stainless steel, and to date there are no known cases of transmission of the virus via banknotes or coins.
To bolster trust in cash, the Bank of England, has said the risk posed by banknotes is no greater than touching other surfaces and Germany's Bundesbank has said the risk of transmission through notes is minimal.
Other central banks, however, have taken preventative measures.
The People's Bank of China (PBOC) has sterilized banknotes from regions affected by the virus, the Federal Reserve has quarantined bills arriving from Asia, and central banks in South Korea, Hungary and Kuwait have also moved to sterilize or quarantine banknotes, the authors write.
"Irrespective of whether concerns are justified or not, perceptions that cash could spread pathogens may change payment behavior by users and firms," said the article by Raphael Auer, Giulio Cornelli and Jon Frost.
But at this point not all digital forms of payments are contactless, including those transactions that require a signature or a PIN entry on a device.
Digital wallets or other smartphone-based payment are one solution while online payments for e-commerce are not susceptible to any viral transmission.
Central bank digital currencies (CBDCs) could quickly become more prominent but would have to be designed to allow for access for those parts of the population that are unbanked or older to avoid opening a "payments divide" between those with access to digital payments and those without.
"The pandemic may hence put calls for CBDCs into sharper focus, highlighting the value of having access to diverse means of payments, and the need for any means or payments to be resilient against a broad range of threats," the article said.
Click to read BIS Bulletin "Covid-19, cash, and the future of payments."
www.CentralBankNews.info
Showing posts with label PBOC. Show all posts
Showing posts with label PBOC. Show all posts
Saturday, April 4, 2020
Sunday, January 19, 2020
China maintains LPR at 4.15% for 2nd month
China's central bank left its new benchmark interest rate, the one-year Loan Prime Rate (LPR), steady at 4.15 percent for the second month in a row as expected after the rate on the medium-term lending facility (MLF) was maintained on Jan. 14.
The People's Bank of China (PBOC) also kept the rate on the 5-year LPR, used to price mortgages, at 4.80 percent.
After reforming its method for calculating LPR and designating it as its new benchmark rate for all loans on August 17, 2019, PBOC set it as 4.25 percent on Aug. 20, 6 basis points below the old LPR and 10 basis points below the previous benchmark lending rate.
LPR was then cut a further 5 basis points in September and November last year for a total effective easing of 20 points in the benchmark lending rate since August.
Under the revised method for calculating the benchmark lending rate, LPR is expressed as a spread to the rate on MLF, which last week was maintained at 3.25 percent.
www.CentralBankNews.info
The People's Bank of China (PBOC) also kept the rate on the 5-year LPR, used to price mortgages, at 4.80 percent.
After reforming its method for calculating LPR and designating it as its new benchmark rate for all loans on August 17, 2019, PBOC set it as 4.25 percent on Aug. 20, 6 basis points below the old LPR and 10 basis points below the previous benchmark lending rate.
LPR was then cut a further 5 basis points in September and November last year for a total effective easing of 20 points in the benchmark lending rate since August.
Under the revised method for calculating the benchmark lending rate, LPR is expressed as a spread to the rate on MLF, which last week was maintained at 3.25 percent.
www.CentralBankNews.info
Thursday, January 2, 2020
China frees up 800 billion yuan by cutting RRR 50 bps
China's central bank lived up to expectations and lowered its reserve requirement ratio for large banks by another 50 basis points, freeing up 800 billion yuan in funds in a move the bank described as "a countercyclical adjustment" that increases the source of funds for financial institutions to directly support the real economy.
The People's Bank of China (PBOC) cut the ratio for large financial institutions to 12.50 percent, it's seventh cut in that ratio since April 2018 when it lowered it for the first time since 2016 from 17.0 percent.
Today's cut in the reserve requirement, which takes effect Jan. 6, comes after Premier Li Keqiang on Dec. 23 said the government was studying further cuts in reserve requirements, among other measures, to lower borrowing costs for small businesses, cementing expectations that PBOC will continue its easing cycle in 2020.
PBOC said on its website the cut in the ratio would lower banks' overall cost of funds by around 15 billion yuan annually, and small and medium-sized banks along with rural institutions would receive over 120 billion yuan of long-term funds to help local businesses.
PBOC added the cut "is by no means an indiscriminate stimulus measure" but helps offset changes in the run-up to the Spring Festival, or Long Lunar holidays, later this month when demand for cash typically rises.
It added such countercyclical adjustments of monetary policy are "appropriate and sound," and the monetary policy stance remains unchanged.
The cut in the reserve requirement comes days after the PBOC told financial institutions to use the Loan Prime Rate (LPR), which is already used to price 90 percent of new loans, to price all new loans beginning this month and convert existing loans to LPR from March to August.
Last August PBOC reformed its system for setting LPR and designated it as the new benchmark rate for all loans. Initially LPR was set at 4.25 percent, 10 percent below the old benchmark lending rate at 4.35 percent, and 6 points below the LPR that had been unchanged since October 2013.
Under the new mechanism, which is based on the rate that 18 institutions offer their best customers, LPR is published on the 20th of ever month and the 1-year LPR was then lowered by 5 basis points in September and then another 5 points in November to its current rate of 4.15 percent.
www.CentralBankNews.info
The People's Bank of China (PBOC) cut the ratio for large financial institutions to 12.50 percent, it's seventh cut in that ratio since April 2018 when it lowered it for the first time since 2016 from 17.0 percent.
Today's cut in the reserve requirement, which takes effect Jan. 6, comes after Premier Li Keqiang on Dec. 23 said the government was studying further cuts in reserve requirements, among other measures, to lower borrowing costs for small businesses, cementing expectations that PBOC will continue its easing cycle in 2020.
PBOC said on its website the cut in the ratio would lower banks' overall cost of funds by around 15 billion yuan annually, and small and medium-sized banks along with rural institutions would receive over 120 billion yuan of long-term funds to help local businesses.
PBOC added the cut "is by no means an indiscriminate stimulus measure" but helps offset changes in the run-up to the Spring Festival, or Long Lunar holidays, later this month when demand for cash typically rises.
It added such countercyclical adjustments of monetary policy are "appropriate and sound," and the monetary policy stance remains unchanged.
The cut in the reserve requirement comes days after the PBOC told financial institutions to use the Loan Prime Rate (LPR), which is already used to price 90 percent of new loans, to price all new loans beginning this month and convert existing loans to LPR from March to August.
Last August PBOC reformed its system for setting LPR and designated it as the new benchmark rate for all loans. Initially LPR was set at 4.25 percent, 10 percent below the old benchmark lending rate at 4.35 percent, and 6 points below the LPR that had been unchanged since October 2013.
Under the new mechanism, which is based on the rate that 18 institutions offer their best customers, LPR is published on the 20th of ever month and the 1-year LPR was then lowered by 5 basis points in September and then another 5 points in November to its current rate of 4.15 percent.
www.CentralBankNews.info
Monday, November 18, 2019
China cuts 7-day reverse repo rate 2 days before LPR
For the second time in less than two weeks, China lowered one of its lending rates by 5 basis points, only two days before it publishes the rate on its new benchmark lending rate, the Loan Prime Rate (LPR).
The People's Bank of China (PBOC) lowered its 7-day reverse repurchase rate on 180 billion yuan in liquidity to 2.50 percent from 2.55 percent, the first reduction since October 2015.
This cut follows a similar-sized 5 basis point cut in the longer-term Medium-Term Lending (MFL) to 3.25 percent on Nov. 5.
In recent years PBOC has been revamping its entire system for setting interest rates and on Aug. 17 it designated LPR as a benchmark lending rate, with the rate linked to MFL.
As part of that move, it changed the method for calculating LPR and now bases it on prices from 18 banks, including two foreign institutions, instead of 10 banks, with the banks required to link their LPR quotes to MFL.
LPR will be published by PBOC on the 20th of each month and on Aug. 20 the 1-year LPR was set at 4.25 percent, 10 basis points below the previous benchmark lending rate, and the 5-year LPR at 4.95 percent.
On Aug. 20 LPR was then set at 4.20 percent, down 5 basis points, while the 5-year LPR was unchanged at 4.85 percent.
www.CentralBankNews.info
The People's Bank of China (PBOC) lowered its 7-day reverse repurchase rate on 180 billion yuan in liquidity to 2.50 percent from 2.55 percent, the first reduction since October 2015.
This cut follows a similar-sized 5 basis point cut in the longer-term Medium-Term Lending (MFL) to 3.25 percent on Nov. 5.
In recent years PBOC has been revamping its entire system for setting interest rates and on Aug. 17 it designated LPR as a benchmark lending rate, with the rate linked to MFL.
As part of that move, it changed the method for calculating LPR and now bases it on prices from 18 banks, including two foreign institutions, instead of 10 banks, with the banks required to link their LPR quotes to MFL.
LPR will be published by PBOC on the 20th of each month and on Aug. 20 the 1-year LPR was set at 4.25 percent, 10 basis points below the previous benchmark lending rate, and the 5-year LPR at 4.95 percent.
On Aug. 20 LPR was then set at 4.20 percent, down 5 basis points, while the 5-year LPR was unchanged at 4.85 percent.
www.CentralBankNews.info
Thursday, September 19, 2019
China's new benchmark LPR down 5 bps to 4.20 percent
China's Loan Prime Rate (LPR), the country's new benchmark interest rate, was lowered by 5 basis points to 4.20 percent and is now 11 points lower than in August when it was introduced.
On Aug. 17 the People's Bank of China (PBOC) reformed its system for setting LPR in an effort to improve the transmission of its monetary policy, lower the cost of financing, and made it the pricing benchmark for all types of loans by commercial lenders instead of its lending rate.
LPR, the average of prices submitted by 18 banks, currently comprises two varieties, a 1 year and a 5 year, and is published on the 20th of each month.
On Aug. 20 LPR was published for the first time since the reform of LPR and set at 4.25 percent, 6 basis points below the 4.31 percent it had been since it was introduced in October 2013, and 10 points below the lending rate's 4.35 percent. The 5-year rate was set at 4.85 percent.
Today PBOC's website showed a graph with the 1 year LPR at 4.20 percent for September, down from 4.25 percent in August and 4.35 percent in July.
The 5-year LPR was unchanged at 4.85 percent from August.
www.CentralBankNews.info
On Aug. 17 the People's Bank of China (PBOC) reformed its system for setting LPR in an effort to improve the transmission of its monetary policy, lower the cost of financing, and made it the pricing benchmark for all types of loans by commercial lenders instead of its lending rate.
LPR, the average of prices submitted by 18 banks, currently comprises two varieties, a 1 year and a 5 year, and is published on the 20th of each month.
On Aug. 20 LPR was published for the first time since the reform of LPR and set at 4.25 percent, 6 basis points below the 4.31 percent it had been since it was introduced in October 2013, and 10 points below the lending rate's 4.35 percent. The 5-year rate was set at 4.85 percent.
Today PBOC's website showed a graph with the 1 year LPR at 4.20 percent for September, down from 4.25 percent in August and 4.35 percent in July.
The 5-year LPR was unchanged at 4.85 percent from August.
www.CentralBankNews.info
Sunday, May 10, 2015
China cuts rate 25 bps, downward pressure on economy
China's central bank cut its benchmark interest rate by a further 25 basis points, as expected, to help boost the economy that is still facing "greater downward pressure" while the overall level of inflation remains low and real interest rates are higher than the historical average.
The People's Bank of China (PBOC) cut its one-year lending rate to 5.1 percent from 5.35 percent while the one-year deposit rate was cut to 2.25 percent from 2.50 percent.
The PBOC has now cut its lending rate by 50 basis points this year, following a 25 basis point cut on Feb. 28, and expectations that the central bank would cut rates again rose on Saturday when consumer inflation in April rose less than expected at 1.5 percent and producer prices fell for the 37th consecutive month, illustrating the excess supply among the country's manufacturers.
Continuing its efforts to liberalize China's financial sector, the central bank again lifted the ceiling on much banks can offer in deposit rates to 1.5 times the benchmark rate from 1.3 times.
The central bank's governor, Zhou Xiaochuan, has on several occasions this year said it is highly probable that China will fully liberalize its interest mechanism this year.
The PBOC said it would continue to "implement prudent monetary policy," a phrase the bank and Chinese government have used for many months to describe its policy stance.
In addition to lowering its benchmark lending rate four times by a total of 90 basis points since November 2014, the PBOC has also cut its reserve requirement twice this year and five times in the last six months to help banks boost lending and stimulate economic activity.
China's Gross Domestic Product expanded by only 1.3 percent in the first quarter from the fourth quarter for annual growth of 7.0 percent - a six-year low but in line with the government's target - down from 7.3 percent in the fourth quarter.
www.CentralBankNews.info
The People's Bank of China (PBOC) cut its one-year lending rate to 5.1 percent from 5.35 percent while the one-year deposit rate was cut to 2.25 percent from 2.50 percent.
The PBOC has now cut its lending rate by 50 basis points this year, following a 25 basis point cut on Feb. 28, and expectations that the central bank would cut rates again rose on Saturday when consumer inflation in April rose less than expected at 1.5 percent and producer prices fell for the 37th consecutive month, illustrating the excess supply among the country's manufacturers.
Continuing its efforts to liberalize China's financial sector, the central bank again lifted the ceiling on much banks can offer in deposit rates to 1.5 times the benchmark rate from 1.3 times.
The central bank's governor, Zhou Xiaochuan, has on several occasions this year said it is highly probable that China will fully liberalize its interest mechanism this year.
The PBOC said it would continue to "implement prudent monetary policy," a phrase the bank and Chinese government have used for many months to describe its policy stance.
In addition to lowering its benchmark lending rate four times by a total of 90 basis points since November 2014, the PBOC has also cut its reserve requirement twice this year and five times in the last six months to help banks boost lending and stimulate economic activity.
China's Gross Domestic Product expanded by only 1.3 percent in the first quarter from the fourth quarter for annual growth of 7.0 percent - a six-year low but in line with the government's target - down from 7.3 percent in the fourth quarter.
www.CentralBankNews.info
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