But if situation changes, especially when more choices are available for investment by commercial banks and when they are more willing to lend, central bank bills will not be so well received. Between 2004 and 2005, stateowned commercial bank reform tackled the most difficult problems. Because of strict requirements including CAR, commercial banks became more prudent in lending.
In the latter half of 2005 when commercial bank reform yielded preliminary result, the ability and motivation of commercial bank to lend increased remarkably. When financial institutions were better able and more willing to expand the business and foreign exchange continued to flow into China, an important challenge in front of us was to be more proactive in macro-economic management.