China’s central bank pumped funds into the financial system and expanded a lending facility to include smaller banks as rising cash demand before the Lunar New Year drove money-market rates up by the most in seven months.
The People’s Bank of China supplied money to the largest commercial banks using its Standing Lending Facility and will auction reverse-repurchase agreements today, it said yesterday on an official microblog without giving details of the amounts involved.
Small- and medium-sized banks in 10 regions will be able to tap the SLF for loans of up to two weeks on a trial basis, according to a statement published on the PBOC’s website. The funds can be tapped when money rates breach certain thresholds, a separate document showed. A 120 billion yuan ($19.8 billion) quota has been set aside for the trial, according to two traders familiar with the matter, who asked not to be identified as the information is confidential.
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