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Out of options and bracing for impact, Chinese authorities ready for more failure.

Eurodollar University

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The Reform of the LPR

PBC authorities wanted to have a little more discretion in setting industry policies as well as influence the economy without going directly into these RRR cuts because they didn't work. The only way they could do that, at least to make that signal plausible, was to reform the LPR. What they did was instead of having a panel of 10 banks just tell them what they think their best customer rate is and then applying a discount factor to the MLF, now we're going to have a panel of 18 banks. They said they did this because they did not like the way in which the old way of monetary policy was not transmitting. This is something that central bankers have complained about the world over

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