Over the past week, the People's Bank of China (PBOC), the central bank, injected 325 billion yuan to the money market through tools including reverse repos and the medium-term lending facility (MLF).
A reverse repo is a process by which the central bank bids and buys securities from commercial banks, with an agreement to sell them back in the future. The MLF was introduced in 2014 to allow commercial and policy banks to borrow from the central bank using securities as collateral.
The PBOC increasingly relies on open-market operations, rather than changes in interest rates or reserve requirement ratios, to manage liquidity in a more flexible and targeted manner.
China will maintain a prudent and neutral monetary policy in 2018 as it strives to balance growth and risk prevention.