China’s Central Bank Set To Maintain Liquidity

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China’s central bank on Thursday continued to pump cash into the banking system via reverse repos to maintain liquidity.

The People’s Bank of China injected 110 billion yuan (about 16.25 billion U.S. dollars) into the market through seven-day reverse repos at an interest rate of 2.2 per cent, according to a statement on the website of the central bank.

The central bank said that the move was intended to maintain reasonable and ample liquidity in the banking system.

As 140 billion yuan of reverse repos and 200 billion yuan of Medium-term Lending Facility (MLF) matured on Thursday, the operation led to a net withdrawal of 230 billion yuan from the market.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

China pursues a prudent monetary policy in a more flexible and appropriate way, according to this year’s government work report. (Xinhua/NAN)

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