MONEY MASTER

China’s central bank is ramping up liquidity injections to  prevent a cash crunch ahead of the Lunar New Year , as seasonal demand, bond issuance and currency flows threaten to drain funds from the banking system. The  People’s Bank of China  (PBOC) injected  600 billion yuan (US$86.4 billion)  through 14-day reverse repurchase agreements late last week, ending a two-month pause in such operations. Analysts at Industrial Securities estimate total injections could reach  up to 3.5 trillion yuan  before the holidays begin. Bloomberg estimates point to a  liquidity shortfall of about 3.2 trillion yuan (US$456 billion) , driven by: Heavy  holiday cash withdrawals Front-loaded government bond issuance Rising  corporate and exporter demand for yuan To keep funding conditions stable, the PBOC has already  doubled bond purchases in January  and added a  record 1 trillion yuan  of medium- to long-term funds into banks. It also...

The People’s Bank of China (PBOC) has introduced a new monetary policy tool aimed at better managing liquidity in the financial system as the country faces ongoing economic pressures. This new measure, known as outright reverse repurchase agreements , will be conducted monthly with primary dealers for a duration of no more than one year, according to a PBOC statement on Monday. The move is intended to maintain reasonable liquidity within the banking system and enrich the central bank's toolkit for fine-tuning the economy . Outright repos, a form of short-term borrowing in the money markets, will include sovereign bonds, local government notes, and corporate debt as eligible securities, the PBOC noted. This new tool marks part of the PBOC's policy shift to operate more like global peers, allowing it to influence market borrowing costs more effectively. The central bank has increasingly relied on the seven-day reverse repo as its main policy lever, moving away from the med...