The People’s bank of China’s response to the coronavirus pandemic: A quantitative assessment

The People’s Bank of China (PBoC) has implemented numerous measures to cushion the impacts of the COVID-19 health crisis on the Chinese economy. Since the current monetary policy framework features a multi-instrument mix of liquidity tools and pricing signals, we employ a dynamic-factor modelling approach to derive a composite indicator of China’s monetary policy stance. Our quantitative assessment shows that the PBoC’s policy response to the outbreak of the COVID-19 pandemic has been swift and decisive. Specifically, our estimates reveal that the PBoC has implemented novel policy measures to ensure that commercial banks maintain liquidity access and credit provision during the COVID-19 crisis.
Highlights • We construct a dynamic-factor-based indicator of China’s monetary policy stance. • Estimates reveal the PBoC’s novel policy measures during the COVID-19 crisis. • The Chinese monetary policy response to the pandemic has been swift and decisive. • The measures ensure liquidity access and credit provision by commercial banks.