Central bank drains 145 bln yuan from market

BEIJING, Sep 17 (XINHUA/APP):China’s central bank drained 145 billion yuan (about 20.5 billion U.S. dollars) from the financial system on Tuesday, with more reverse repos and medium-term lending facility (MLF) maturing than conducted.

The People’s Bank of China (PBOC) injected a total of 200 billion yuan into the market via one-year MLF at the interest rate of 3.3 percent, the central bank said on its website.Meanwhile, 265 billion yuan of MLF matured on Tuesday.

PBOC skipped reverse repo operations on Tuesday, with 80 billion yuan of reverse repos maturing on the same day.

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Tuesday’s open market operations came after the release of around 800 billion yuan of long-term capital on Monday when a lower reserve requirement ratio for financial institutions went into effect.

The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.

Reverse repos enable the central bank to purchase securities from commercial banks, with an agreement to sell them back in the future.

China vowed to keep its prudent monetary policy “neither too tight nor too loose” while maintaining market liquidity at a reasonable level in 2019.

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