China’s Central Bank Has New Policy Tool to Manage Liquidity
- New repo tool to help maintain liquidity in system: PBOC
- Could help with increase in bond issuance, StanChart says
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China’s central bank is expanding its monetary policy toolkit to get a better handle on liquidity in the financial system as it seeks to add more levers to fine-tune the economy.
The People’s Bank of China will conduct outright reverse repurchase agreements with primary dealers monthly for a timeframe of no more than a year, according to a statement Monday. The move is aimed at maintaining a reasonable level of liquidity in the banking system and enriching its toolkit for monetary policy, the PBOC said.