I posted a reference to comments from Sheng Songcheng former director-general of statistics and research (and now an adviser) at the People's Bank of China
- PBOC will not take action to shrink its balance sheet like the U.S. Federal Reserve
- PBOC does not face the same pressures due to its use of different policy tools
- PBOC's assets are mainly foreign exchange-based
- "The PBOC does not have the huge portfolio of securities assets that need to be dealt with and foreign exchange accounts are impacted by capital flows, which can be hedged by adjusted other subjects"
- Sheng also said that while the Fed's balance sheet expanded rapidly during the financial crisis, from less than $900 billion before 2007 to $4.5 trillion in 2014, the PBOC's balance sheet less than doubled in size during that period.
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I'm posting this as background info of what we can expect from the PBOC as policy develops.
