The Central Bank of China and Suzhou Municipal Government are helping JD.com test digital currency for online shopping in December 2020. Photo: Courtesy of JD.com

China does not have the structural shortcomings that will trigger a subprime mortgage crisis like the one that occurred in the United States in 2007, as housing demand from urban and rural residents of the country continues to rise in China. the framework of regulatory measures aimed at preventing and managing the risks of the real crisis. housing market, the former head of the People’s Bank of China (PBC) said on Sunday.

Dai Xianglong, former governor of the PBC, the central bank, made the remarks at a financial summit hosted by iFeng news in Shanghai, speaking about China’s modern financial development over the next five to ten years.

Dai said the central bank announced a reduction in the reserve requirement ratio of commercial banks aimed at increasing market liquidity, after the Political Bureau of the Communist Party of China Central Committee held a meeting on December 6, proposing to ” promote housing construction and support the commercial housing market to better meet the needs of home buyers ”.

The decision will effectively control and reduce the risks of the real estate sector and promote the healthy development and positive functioning of the sector, Dai said.

As of October 8, China had opened 123 million digital yuan wallets with a total transaction value of RMB 56 billion.

Dai said the internationalization of the yuan is a long process, and the authorities should step up efforts to facilitate its convertibility, improve overseas regulations and develop offshore markets, in order to increase recognition of the Chinese currency in China. within the international financial community.

Dai noted that the internationalization of the yuan is not a challenge for the dollar, as the dollar is still the main world currency and has been for a long time and China wants it to remain stable.

However, the US economy and gold reserves have weakened in the face of a rapidly growing deficit, and the dollar is likely to maintain a downtrend in the long term. According to Dai, the US government issued $ 29 trillion in debt, inevitably leading to inflation and pushing up world prices. China’s macro-financial regulation is expected to prevent severe inflation with accelerated monetary circulation.

Dai encouraged the authorities to establish a social finance system that effectively matches direct and indirect finance to improve the efficiency of the use of social funds, in addition to developing Shanghai as an international financial center.

Dai said that China’s modern financial construction is a key element in the reform and development of China’s financial industry, and the US government cannot hinder its acceleration.

In the future, China will continue to oppose and respond to the US containment of China’s modern financial development, as well as promote international monetary diversification, further increasing China’s voice in international financial affairs. and maintaining the stability of the international financial order, Dong added.

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