PBOC injects cash into banks to ease stress

It added $101b (CNY700b) of one-year funding via the medium-term lending facility.

The People’s Bank of China (PBOC) has supplied liquidity to commercial banks to help them manage incoming government bond sales, reports Bloomberg.

The central bank added $101b (CNY700b) of one-year funding via the medium-term lending facility, meant to offset the $57.6b (CNY400b) in loans coming due 17 August and another $21.6b (CNY150b) maturing on 26 August.

In addition, the central bank last week offered the most short-term funds since May, replenishing a banking system which needs about $500b this month.

The net injection indicates “a more accommodative stance on keeping liquidity levels ample” so that commercial banks can continue to support bond issuance and to stabilize credit growth, said Liu Peiqian, a China economist at Natwest Markets in Singapore.

The move is “a signal to ensure policy continuity and stability” rather than a reaction to a slower pace of economic recovery, she said.

Here’s more from Bloomberg.