BUSINESS China's central bank injects liquidity into market

BUSINESS

China's central bank injects liquidity into market

Xinhua

11:11, July 20, 2020

The People's Bank of China. (Photo: Agencies)

BEIJING, July 20 (Xinhua) -- China's central bank continued to pump cash into the banking system via reverse repos Monday.

The People's Bank of China injected 100 billion yuan (about 14.29 billion U.S. dollars) 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 injection is intended to maintain reasonable and sufficient liquidity in the banking system, the central bank said.

As 50 billion yuan of reverse repos matured Monday, the operation led to a net injection of 50 billion yuan.

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.

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