China – PBOC injects funds using LMF (156bn yuan for 1 year)

The People’s Bank of China skipped opne market operations (no reverse repos today) earlier

But the Bank has injected funds via the Medium term Lending Facility (MLF)

  • injects 156bn yuan
  • Rate 3.3%
  • 1 year injection

Note, there is 156bn yuan of maturing MLF today, so this effectively a roll over of these 

Note also, the Bank injected 80.1bn yuan through Pledged Supplementary Lending (PSL)

A quick guide to the alphabet soup of PBOC money market operations:

Open-Market Operations (OMO)

  • Most frequently used (I report on these each day M-F)
  • Mainly short-term loans to banks
  • Depending on the size of the funds added and the amounts that mature, the operations can result in either a net injection or withdrawal of cash from the financial system
  • Range from seven days to several years, but it’s the 7-, 14- & 28-day contracts that are most commonly used
  • Have an immediate effect on the money market, pushing rates one way or the other
  • Operations are carried out using what are known as reverse-repurchase agreements, where banks use bonds as collateral to borrow funds from the PBOC and agree to return the money at a future date. The central bank also uses repurchase agreements, which drain cash, as well as bill sales in its OMOs.

Medium-term Lending Facility (MLF)

  • three, six and 12 months loans
  • loans to banks

Pledged Supplementary Lending (PSL)

  • Used to fund China’s three policy banks (tasked with financing government projects) for investment
  • “Policy banks”: Agriculture Development Bank of China, China Development Bank Corp. and the Export-Import Bank of China

More here

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