China's central bank reiterated on Wednesday it would continue its moderately loose monetary policy, which is the third confirmation that its monetary policy will remain unchanged in six days.

It would also use open market interventions to control the amount of credit available rather than setting a national cap, The the People's Bank of China (PBOC) said in a statement on its website.

The announcement comes after a 5% plunge in Chinese stock market on Wednesday, the biggest daily loss within eight months, as there are concerns that the PBOC would have to modify its monetary policies to reign in lending.

New loans in China in the first six months of this year totaled 7.37 trillion yuan ($1.1 trillion), far above the PBOC's target of 5 trillion ($732 billion).

The central bank has said previously it would take steps to control loan risks and the distribution of loans.

Analysts believe the central bank could fine-tune the huge credit by using open market operation tools.

In fact, the central bank has already initiated the selling of bills worth 100 billion yuan to certain commercial banks in order to control loans, according to a report by China Securities Journal.