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China's central bank adds liquidity via reverse repos, MLF

BEIJING
2024-01-15 10:21

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BEIJING, Jan. 15 (Xinhua) -- China's central bank injected liquidity into the banking system through reverse repos and medium-term lending facility (MLF) on Monday to keep liquidity reasonable and ample.

The People's Bank of China conducted 89 billion yuan (about 12.52 billion U.S. dollars) of seven-day reverse repos at an interest rate of 1.8 percent.

A total of 995 billion yuan was also injected into the market via the MLF, which will mature in one year at an interest rate of 2.5 percent, unchanged compared with previous operation.

The operations aim to keep liquidity in the banking system reasonable and ample, the central bank said in a statement.

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.

The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
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