BEIJING, Sept. 15 (Xinhua) — China’s central bank on Friday added liquidity to the banking system through operations of medium-term lending facility (MLF) and reverse repos.
The People’s Bank of China injected 591 billion yuan (about 82.33 billion U.S. dollars) into the market through one-year MLF with an interest rate of 2.5 percent.
The MLF tool helps commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
China’s central bank also conducted a total of 139 billion yuan of reverse repos. The amount included 105 billion yuan of seven-day reverse repos at an interest rate of 1.8 percent, and 34 billion yuan of 14-day reverse repos at an interest rate of 1.95 percent.
A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
The moves aim to keep stable liquidity in the banking system at the end of the quarter, according to the central bank.