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China’s central bank yesterday pumped cash into the banking system via reverse repos to maintain liquidity.
With no reverse repos maturing yesterday, the People’s Bank of China injected a total of 180 billion yuan (about US$25.5 billion) into the market through seven-day reverse repos at an interest rate of 2.2 percent, according to a statement on the website of the central bank.
The move is intended to maintain stable liquidity in the banking system, the central bank said.
A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
China will pursue a prudent monetary policy in a more flexible and appropriate way, according to this year’s government work report.
The country will use a variety of tools including required reserve ratio reductions, interest rate cuts, and re-lending to enable M2 money supply and aggregate financing to grow at notably higher rates than last year, said the report. — xinhuanet.com.
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