People's Bank of China is rethinking relations with markets

(Jan 10): As the end of People’s Bank of China Governor Zhou Xiaochuan’s term approaches, a firmer yuan and calm markets are providing a window to get some of his long-term reforms back on track.

The latest news in the two-steps forward, one-step back move to a more freely traded currency came Tuesday, as Bloomberg reported the central bank has tweaked its management of the daily currency fixing, removing a hurdle to the influence of market forces.

The PBOC is adding transparency to its daily interactions with the money market, aiding Zhou’s long quest to move to a price-based monetary framework. The central bank is also developing tools to rein in risks in banking and property markets after vocal warnings from Zhou on the risks of inaction on these fronts.

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