China continues to inject money into market

Beijing. June 21. Silkroadnews - The People’s Bank of China continues to increase the liquidity of the financial system through operations on the open market to compensate for liquidity pressure, People’s Daily report.
The People’s Bank of China injected 100 billion yuan (about $15.5 billion) into the market through reverse repo contracts with 50 billion yuan, which led to a net injection of 50 billion yuan.
A reverse repo is a process through which the central bank offers and purchases securities from commercial banks, with an agreement to sell them back in the future. The central bank also injected 200 billion yuan for medium-term loans. The interest rate for such a loan was 3.3% per annum.
First introduced in 2014 to help commercial and political banks maintain liquidity, the medium-term lending facility allows lenders to borrow funds from the central bank using securities as collateral.
According to the central bank, these steps are aimed at compensating for the impact of a number of factors, including peak tax burden, reducing liquidity pressures, etc. The central bank increasingly relies on open market operations, rather than changing interest rates or reserve ratios to manage liquidity in a more flexible and targeted manner, the report reads.
China has decided to adhere to a reasonable and neutral monetary policy in 2018, as it seeks to balance growth and risk avoidance.