22 Some of the capital outflows have been Chinese corporations paying down foreign currency debt, which is a good thing. The People’s Bank of China still has around $ trillion in reserves. There is concern in markets that, if capital account pressures were to continue, the central bank may have to either lower its target range for the currency or introduce more-stringent capital controls.
In view of the lessons from the global financial crisis and the global recession, the BOU is also setting up a Financial Stability Department whose role, among others, will be to provide basic analysis of financial stability. The emphasis will be to provide a comprehensive stability assessment, highlighting the various risks to macroeconomic stability.