The People's Bank of China (PBOC), the country's central bank, said Wednesday that the government is aiming to achieve a 14-percent growth in its outstanding broad money supply (M2) this year.

The statement came in a report released by the PBOC to address the country's monetary policy adopted in the fourth quarter of last year.

M2, which refers to cash in circulation and all deposits, is a major index that measures the country's monetary supply.

The targeted growth rate was slightly higher than that of last year, PBOC data showed.

The country's M2 rose 13.6 percent year-on-year to 85.16 trillion yuan in 2011, down 6.1 percentage points from the previous year.

By the end of January, the M2 increased by 12.4 percent year-on-year to 85.58 trillion yuan, according to the PBOC.

The PBOC said in the report that it will continue to implement a prudent monetary policy and maintain the continuity and stability of its policies.

The PBOC also noted that it will preset and fine-tune its policies to make the financial sector better serve the real economy and prevent systematic financial risks, in line with domestic and external development situations in the economic and financial sectors.

Furthermore, the PBOC said it will implement multiple monetary policy instruments, improve its macro-prudential policy framework and optimize its credit structure to maintain a reasonable social financing scale in 2012.

The country's new yuan-denominated lending in 2011 reached 7.47 trillion yuan (1.18 trillion U.S. dollars), down from 7.95 trillion yuan in 2010, as the government moved to squeeze liquidity.

The PBOC will continue to work on reforms that will be applied to the marketization of interest rates and the formation of the yuan's exchange rate, it said.

It said the yuan's exchange rate has become more flexible as the yuan's value rose 22.68 percent against the euro and dropped 9.92 percent against the yen since 2005, when the country started reforms to the yuan's exchange rate mechanism.

Meanwhile, the yuan appreciated against the U.S. dollar for 143 trading days while depreciating for 101 trading days during the past year, it said.

The PBOC forecast that the country will see a positive inflow of foreign capitals, but the inflow will be lower than the average level of previous years.

The country's foreign exchange reserves as of the end of the fourth quarter last year topped 3.18 trillion U.S. dollars, down 20.6 billion U.S. dollars from the previous quarter, triggering concerns of losing capital.

But the PBOC said the country will continue to attract long-term international capital because of the economy's steady growth and great market potentials.

Trade surplus and foreign direct investments will remain the major channels for foreign exchange funds to enter the market, it said.

Noting that the growth of the country's consumer prices has been contained, the PBOC also warned that the government should not drop its guard against inflation.

The country adopted a slew of measures to rein in the runaway inflation. Its consumer price index, a main gauge of inflation, eased to a 15-month low of 4.1 percent in December. But it still grew 5.4 percent year-on-year in 2011, well above the government's full-year target of 4 percent.

The PBOC said the higher-than-expected inflation data in January showed that inflationary expectation is still instable, and both domestic factors such as rising labor and resource costs as well as loose outside monetary environment will push up inflationary pressures.

The CPI surged 4.5 percent year-on-year in January, up from 4.1 percent in December and 4.2 percent in November.