China plans to further incorporate climate change factors in its monetary policy, including looking into introducing these in the stress test for financial institutions.

It is also studying the use of preferential interest rates, special refinancing and other similar tools to encourage financial companies in supporting carbon emission reduction, People's Bank of China Governor Yi Gang said at an industry forum March 21.

"In terms of foreign exchange reserve investment, we will continue to increase the allocation of green bonds, control investments in high-carbon assets and incorporate climate risk factors into the investment risk management framework," said Yi, describing green finance as a key task for the central bank.

Other plans include promoting a compulsory information disclosure system for financial institutions to report their use of green credit funds.

China had the world's biggest green loan balance, comprising domestic and foreign currencies, of 12 trillion yuan at 2020-end, Yi said. The country also held the world's second-largest stock of green bonds worth 800 billion yuan and is aiming to be carbon-neutral by 2060. These factors mean there is an urgency in guiding China's financial system toward providing the required green investment and financing support, as well as mitigating economic and asset losses as a result of climate change, Yi added.

As of March 19, US$1 was equivalent to 6.51 Chinese yuan.