PBOC Expands Liquidity Injection To Include Small Banks

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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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu