China incorporates a new financial liquidity tool into its monetary policy

Published at: 28/10/2024 12:10 PM

The Central Bank of China (BPCh) announced on Monday the incorporation of direct reverse repos into its monetary policy, with the objective of maintaining reasonable and ample liquidity in the country's banking system.

According to a statement issued by the Asian giant's financial institution, these tools will be issued monthly and will be valid annually to trade with primary traders in open market operations.

The document states that the initiative includes seven-day reverse repos and one-year medium-term loans, as well as purchases of Treasury bonds and cuts in the mandatory reserve ratio to inject long-term liquidity.

The introduction of direct reverse repos fills a gap in the Chinese bank's liquidity toolbox, which previously lacked an option for periods ranging from one month to one year, analysts said, quoted by international media.

Mazo News Team