BEIJING, May 15 (Xinhua) — China’s central bank Monday added liquidity to the banking system through operations of medium-term lending facility (MLF) and reverse repos.
The People’s Bank of China injected 125 billion yuan (17.93 billion U.S. dollars) into the market through one-year MLF with an interest rate of 2.75 percent.
The MLF tool helps commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
The central bank also conducted seven-day reverse repos worth 2 billion yuan at an interest rate of 2 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.