China’s Central Bank Purchases Securities To Stabilise Liquidity

China’s Central Bank on Friday conducted a total of 186 billion Yuan (about 26.2 billion dollars) of reverse repos to maintain liquidity in the banking system.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to resell them in the future.

The People’s Bank of China, said that the amount included 128 billion Yuan of seven-day reverse repos at an interest rate of two per cent.

It further said that the amount also included 58 billion Yuan of 14-day reverse repos at an interest rate of 2.15 per cent.

According to the central bank, the move aims at stabilising liquidity in the banking system at the end of the quarter.

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