There's no seams inside so you can sterilize it very easily.

Second, many argue that raising interest rates would trigger a flood of speculative capital from low yielding advanced economies. With the PBOC unable to sterilize the inflows, upward pressure on the renminbi s exchange rate would threaten competitiveness.

Instead, the PBC s policy is preemptive sterilize over liquidity and get the money supply under control in order to prevent inflation or over heating. At the beginning of the year, the RRR increases could be regarded as part of efforts to correct the over supply of money that arose from the anti crisis stimulus package.

Also, if exit occurs by selling the long term assets purchased during QE, a sharp increase in interest rates might choke off recovery, resulting in large financial losses for holders of long term bonds. And, if the exit occurs via a rise in the interest rate on excess reserves (to sterilize the effect of a base money overhang on credit growth), the ensuing losses for central banks balance sheets could be significant.