PBC injects 229b yaun to maintain banking system liquidity

China’s central bank, the People’s Bank of China (PBC), provided liquidity to banks through reverse repos and medium-term lending facility (MLF) on Monday to maintain adequate liquidity amid a tax payment peak.

The PBC provided 129 billion yuan through seven-day reverse repos at 1.8 per cent interest and 100 billion yuan through MLF at 2.5 per cent interest, with a one-year maturity.

This involves the central bank purchasing securities from commercial banks through an auction process. The PBC agrees to sell these securities back to the banks at a predetermined future date.

Introduced in 2014, the MLF allows commercial and policy banks to borrow funds from the central bank using securities as collateral. This helps these banks maintain their liquidity levels.

Attribution: Xinhua