China should pursue a stable monetary policy in the face of risks from both inflation and falling prices, as it is not urgent to cut interest rates, the China Securities Journal quoted a former banker as saying on Monday.

Wu Xiaoling, former deputy governor of the People's Bank of China, the country's central bank, said over the weekend that fiscal policies and other policies were of more importance than monetary policies to maintain the stability of the country's economy amid the current complicated situation both at home and abroad.

To sustain the economy from the ongoing world financial crisis, many nations have injected capital; China and other countries have cut interest rates. As China's financial system remains stable, "to ensure steady capital flow is all that matters", said Wu, who is now deputy director of the Financial and Economic Affairs Committee of the National People's Congress, China's top legislature.

She noted the country should rely more on fiscal policies instead of monetary policies, as sufficient monetary policy adjustments had already been made.

The country's central bank has cut interest rates three times since September to stimulate the economy.

The State Council issued 10 policies in October to buoy economic growth, such as tax exemption, mortgage deposits reduction and others.

Several years of trade surplus has helped the country accumulate huge amounts of inter-bank money in liquidity. The reserve of central bank bills was valued at 4.8 trillion yuan (US$701.7 billion) at the end of September.

"China will not cut the reserve requirement ratio until the influx of foreign currency reserves falls sharply", she said, suggesting that a reduction in central bank bills should be considered first to increase capital liquidity, if the influx of foreign capital was unstable.

The country's central bank announced on October 29 that it would issue one-year central bank bills every two weeks, a change from the previous once a week. It was a move to stimulate commercial banks to actively grant loans.

(Xinhua News Agency November 4, 2008)