China Central Bank Adds $70 Billion With New Liquidity Tool
- PBOC makes first known use of outright reverse repo agreements
- Additional cash helps banks deal with rising funding pressure
The People's Bank of China in Beijing.
Source: Bloomberg
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China’s central bank injected $70 billion worth of cash into money markets this month via a newly established policy tool, in a step to ease liquidity stresses in the fragile economy and encourage banks to lend.
The People’s Bank of China conducted 500 billion yuan of “outright reverse repurchase agreements” in October in order to safeguard reasonably amble liquidity in the banking system, it said in a statement Thursday. The agreements are for six months, the bank said.