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November 6, 2017

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PBOC injects US$85b via various tools

CHINA’S central bank injected 561.35 billion yuan (US$84.6 billion) into the market via various tools in October to maintain liquidity.

The People’s Bank of China said 498 billion yuan were added via the medium-term lending facility to keep interbank liquidity stable. The funds will mature in one year at an interest rate of 3.2 percent.

The injection brings outstanding MLF loans to 4.4 trillion yuan at the end of October.

The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the PBOC using securities as collateral.

The central bank increasingly relies on open-market operations for liquidity, rather than cuts in interest rates or reserve requirement ratios.

In October, the PBOC also granted 24.95 billion yuan to financial institutions through the standing lending facility to meet provisional liquidity demand.

Last month, the PBOC injected 38.4 billion yuan of funds through the pledged supplementary lending to the China Development Bank, the Agricultural Development Bank of China and the Export-Import Bank of China.

The PBOC’s open market operations are closely watched by the market, as they have become major tools for it to pursue monetary policy.


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