China's central bank says financial system stable

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Economic conditions were complicated and should not be underestimated, the People's Bank of China (PBOC) said in a statement published on its website.

The bank reiterated that it would continue to push forward with interest rate liberalization and keep the yuan exchange rate at a "reasonable level", without providing details.

The bank in June issued guidelines for banks to issue large-scale certificates of deposit to individual and institutional investors, paving the way for full interest rate liberalization.

The bank also repeated that it would maintain a prudent monetary policy and keep liquidity "appropriate".

The rapid decline of China's previously booming stock market, which by the end of last week had fallen about 30 percent from a mid-June peak, has been a major headache for top leaders, who were already struggling to avert a sharper economic slowdown.

Authorities have been rolling out rescue measures almost every day since late June to calm retail investors.

The government is due to release second-quarter gross domestic product data on July 15 and many economists expect growth to dip below 7 percent, which would be the weakest performance since the global financial crisis.

(Reporting By Winni Zhou and Nicholas Heath; Editing by Simon Cameron-Moore)