China's central bank has less scope to cut the amount of cash banks are required to set aside as reserves than in past years, according to People's Bank of China Governor Yi Gang.

The central bank has cut the reserve requirement ratio five times since the beginning of 2018, lowering the ratio by 3.5 percentage points, in order to stimulate lending amid slowing economic growth. It has also introduced various measures to boost lending, in particular to privately owned and small businesses, including to expand the definition of companies categorized as small and micro-sized enterprises.

China's overall reserve ratio requirement for banks is on par with other developed economies such as the U.S. and Europe when taking into account the weighted average reserve ratio and the excess reserve ratio, Yi said March 10 during a press conference with reporters.

Further, the central bank intends to eventually create a framework for reserve ratios that will distinguish between three bank categories based on size — large banks, medium-sized banks and small banks, including rural cooperatives.

PBOC Deputy Governor Pan Gongsheng said while corporate bond defaults in China rose in 2018, defaults accounted for 0.79% of the Chinese bond market. He said the rate of default was not high compared with the country's nonperforming loan ratio of 1.89%. The central bank plans to work on expanding access and controlling risks in the Chinese bond market in 2019, as well as to improve the system for resolving bond defaults.

The Chinese central bank also pledged to maintain a "prudent" monetary policy stance that would reflect "countercyclical adjustments." It will also maintain the growth of money supply and social financing in line with nominal economic growth, as well as to continue introducing reforms to lower interest rates.

Meanwhile, Chinese financial institutions extended 885.8 billion yuan of new yuan loans in February, down from a record-high level of 3.23 trillion yuan in January, according to PBOC data. Yi noted that the decline was due to seasonal factors including the timing of the Lunar New Year, which began in early February.

As of March 8, US$1 was equivalent to 6.72 Chinese yuan.