China's central bank said on Thursday that it will strengthen the ability to adjust interest rates and improve efficiency of its medium-term lending facility (MLF), standing lending facility (SLF) and reverse repos operations.

The People's Bank of China has been relying more on market-based policy tools, including the MLF, SLF and repurchase agreements to adjust liquidity and market interest rates, while keeping its benchmark interest rates steady.

"We will deepen market-based interest rate reform, constantly improve the formation, regulation and transmission mechanism of market-based interest rates, and enhance the central bank's ability to adjust interest rates," the PBOC said in a report on financial market development in 2016,

The PBOC adopted a modest tightening stance at the start of this year, guiding interest rates higher during the first quarter, including immediately after the Federal Reserve raised U.S. rates in March. But the central bank did not hike following a Fed rate rise in June, and it injected substantial liquidity last month to help avoid an end-quarter cash crunch amid a deleveraging drive.

The central bank also said it will increase yuan flexibility versus dollar, actively guide and stabilize market expectations and balance cross-border capital flows.

The PBOC said on Tuesday that it would continue to implement a prudent and neutral monetary' policy, and keep liquidity in China's financial system basically stable.

China will study and steadily push financial regulatory reform and improve the stability of financial institutions, as well as appropriately deal with some high-risk institutions this year, the central bank said.

Chinese leaders will hold the National Financial Work Conference, a five-yearly meeting, in mid-July to discuss financial regulatory reforms, financial safety and other issues, the financial magazine Caixin reported on Wednesday.