Rising money market rates and bond yields in recent months indicate the People's Bank of China is committed to curbing high debt levels in the economy to head off potential financial risks, but there is little sign of abrupt policy tightening.

"We will use various liquidity management tools in a flexible way and improve the system to appropriately adjust liquidity to maintain reasonable growth in credit and social financing," Zhang Xiaohui, head of the central bank's monetary policy department, wrote in an article published in China Finance magazine, which is run by the central bank.

The PBOC has pledged to keep monetary policy largely stable this year with timely fine-tuning in line with economic changes.

China's potential growth rate is falling as the population ages, and the economy faces increased resource and environmental constraints, and other structural problems, Zhang said.

The central bank must strike a balance between promoting growth, structural adjustments and reforms, while preventing financial risks, she said.

"Faced with these new situations and new problems, the People's Bank of China has always paid attention to appropriately handling liquidity management and interest rate changes, neither relaxing nor tightening monetary policy," she said.

Since late June, commercial banks have gradually adjusted their asset and liability management models to ease their mismatch problems and slow down interbank business, she added.

There are increased positive signals in China's economy amid signs that growth is stablising but it still faces risks and challenges, Zhang said.

The central bank will likely make measured use of policy tools, such as short-term liquidity operations (SLO), to help lenders weather sporadic cash strains this year, analysts say.

The reformist central bank was accused of worsening June's market turbulence by keeping the purse strings too tight. But it has since sought to improve its communication with the market.

Demand for cash is strongest near the end of each quarter as banks rush to meet regulatory requirements, such as loan-to-deposit and reserve ratios, and pay out maturing financial products - a factor that fuelled both episodes in 2013.

The PBOC will push financial reforms, including widening the issuance of interbank certificates of deposit (CD) and increasing the two-way float of the yuan, Zhang said.

(Reporting by Kevin Yao; Editing by Jacqueline Wong)