PBOC Pumps 265 Billion Yuan into Banking System
09. Oct, 2012
The People’s Bank of China (PBOC) pumped 265 billion yuan (US$ 42.14 billion) into the country’s banking system to jolt their economy. The PBOC is attempting to lower money market rates. This is the second monetary injection in two weeks. In addition, this is the second largest liquidity injection of its nature in China. Over the past seven years, the size of emerging Asian central bank balance sheets is at historically high levels. A fast rate of increase in central bank balance sheet growth can lead to higher inflation.
Mechanics
The People’s Bank of China utilized reverse repurchase agreements to pump 265 billion yuan into money markets. These reverse repurchase agreements are essentially short-term loans to financial institutions.
Total Monetary Liabilities – In Hundreds of Millions Chinese Yuan
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Source: People’s Bank of China
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