BEIJING, Feb. 18 (Xinhua) — China’s central bank on Sunday added liquidity to the banking system through operations of medium-term lending facility (MLF) and reverse repos.
The People’s Bank of China injected 500 billion yuan (about 70.39 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 105 billion yuan of seven-day reverse repos at an interest rate of 1.8 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, according to the central bank.