The People's Bank of China, China's central bank, Thursday said it is appropriate to maintain a stable benchmark interest rate of the Chinese currency, while expanding the trial of a floating rate in rural credit cooperatives.

According to a quarterly report on the monetary policy published, the People's Bank of China said the government should do a better job in implementing its prudent monetary policy in the second half of this year.

In the process of guarding against financial risks, efforts should be made to properly regulate money supply, vigorously optimize the loan structure, help commercial banks establish and improve the incentive mechanism on money business, and strengthen the support of the financial sector to economic development, the central bank said.

The report stresses the need to maintain a proper growth in loans through various monetary measures, including the use of the interest rate as a lever, appropriately broadening the scope of the experiment with a floating interest rate in rural credit cooperatives.

It also calls for a regulation on interbank lending among commercial banks in a bid to resolve the shortage of capital at some branches of certain commercial banks.

The report urges commercial banks to continue to provide loans to individuals for housing and car purchase, education and re-employment.

(Xinhua News Agency August 2, 2002)