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Hu Xiaolian, deputy governor of the People's Bank of China, says a more flexible yuan can help ease inflation pressure and restrain asset bubbles.
Hu says that the fixed yuan exchange rate caused excess financial liquidity that increased the risk of inflation and "severely challenged" the effectiveness of China's monetary policy. Hu says the reform will strengthen the country's resilience to external shocks.
She says moderate yuan moves can help adjust trade and international payments, helping realize stable and sustainable economic growth.