China's central bank skips reverse repos as RRR cut unleashes liquidity

BEIJING, Jan. 6 (Xinhua) - The People's Bank of China (PBOC), the country's central bank, skipped reverse repos as a lower reserve requirement ratio (RRR) for banks takes effect on Monday.

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(File photo)

The move to cut the RRR by 50 basis points will inject around 800 billion yuan (about 114.75 billion US dollars) into the market, which will absorb impacts from factors including maturing reverse repos, the People's Bank of China said on its website.  

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 country will continue to implement a proactive fiscal policy and prudent monetary policy, according to the annual Central Economic Work Conference held in December, 2019.

The quality and effect of the fiscal policy must be enhanced with more efforts on structural adjustment, while the monetary policy should be pursued with moderate flexibility to maintain market liquidity at a reasonably ample level, said a statement released after the conference.