China to use multiple tools to keep holiday period liquidity stable: central bank

FILE PHOTO: A woman walks out of the headquarters of PBOC in Beijing
FILE PHOTO: A woman walks out of the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing November 20, 2013. REUTERS/Jason Lee/File Photo

February 9, 2018

BEIJING (Reuters) – China’s central bank said on Friday it will continue to flexibly make use of a combination of tools to keep liquidity reasonably stable during the coming Lunar New Year holiday.

The People’s Bank of China will continue to use its medium-term lending facility (MLF) around the holiday that starts next week to supplement mid- and long-term liquidity, and also conduct reverse repos at appropriate times, a statement on its website said.

The central bank, in a separate statement earlier Friday, said it has released temporary liquidity worth almost 2 trillion yuan ($316.28 billion) to satisfy cash demand before the long holiday.

While liquidity always tightens at this time of year, China’s financial markets and policymakers have been more sensitive to risks of a cash squeeze since authorities began a clampdown on riskier forms of financing in early 2017.

The clampdown has led to occasional spikes in money market rates and bond yields.

(Reporting by Beijing Monitoring Desk; Writing by Elias Glenn; Editing by Richard Borsuk)