A cashier at a bank in Taiyuan, Shanxi province counts renminbi notes. [Photo/China News Service]

The People's Bank of China, the central bank, conducted the fifth central bank bills swap (CBS) operation in 2020 Tuesday to improve the liquidity of perpetual bonds issued by commercial banks.

The CBS, valued at 5 billion yuan ($701 million), are open to primary dealers for bidding at a fixed rate of 0.1 percent, the central bank said in a statement.

The swap will be due on Aug 26, 2020, said the statement.

To maintain liquidity in the banking system, the central bank Tuesday injected 10 billion yuan into the market through seven-day reverse repos at an interest rate of 2.2 percent.

The CBS scheme allows dealers to swap the perpetual bonds they hold for central bank bills, which will effectively boost market demand for perpetual bonds but have a neutral impact on liquidity in the banking system.

Perpetual bonds are fixed-income securities with no maturity date and are not redeemable but pay a steady stream of interests forever.