PBOC Starts Short-Term Liquidity Operations as Rates Liberalized

The People’s Bank of China said it will start short-term liquidity operations as additional tools to manage cash supply, amid efforts by policy makers to promote liberalization of interest rates.

Repurchase agreements and reverse repurchase contracts with a maturity of less than seven days will be the main tools of the so-called SLOs, the central bank said in a statement yesterday. It named 12 banks, including Industrial & Commercial Bank of China Ltd. and Bank of China Ltd., as participants in the SLOs, which will supplement regular open-market operations held each Tuesday and Thursday. Standard Chartered Plc said the move marks a PBOC shift toward using money-market rates as a policy tool.