China's PBOC Launches New Reverse Repo Tool Effective Immediately to Enhance Liquidity

Oct 28, 2024, 01:15 AM

China's central bank, the People's Bank of China (PBOC), announced on Monday that it is introducing a new monetary policy tool effective immediately: outright open market reverse repurchase agreements (reverse repos). The facility will allow the PBOC to conduct monthly reverse repo operations with primary dealers, aiming to maintain sufficient liquidity in the banking system and enrich its monetary policy toolbox. The operations will be carried out once a month, with tenors of less than one year, including three-month and six-month terms. The move comes ahead of significant year-end loan expiries, as the PBOC seeks to enhance liquidity adjustments in the coming year.