Papademos: China should rethink monetary tools

China's battle against inflation requires enhancing the room for manoeuvre in monetary policy, said Lucas Papademos, the vice president of the European Central Bank.

Speaking at a summit on China-Europe relations in Hamburg, Papademos said that China would benefit from greater exchange rate flexibility, as the continuing substantial foreign exchange inflows and the persistent current account surpluses keep augmenting domestic monetary liquidity.

Greater reliance on interest rates as an indirect

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