Vientiane: (Xinhua/KPL?) China’s central bank announced Thursday that it has conducted “outright reverse repo” operations, the first of its kind since the monetary policy tool was introduced earlier this week. In a statement, the People’s Bank of China said it carried out the operations in the amount of 500 billion yuan (about 70.2 billion U.S. dollars) through a variable-rate tender with a fixed quantity and multi-price auction, with a tenor of six months.
According to Lao News Agency, the move was aimed at keeping liquidity in the banking system adequate at a reasonable level, as stated by the central bank. The introduction of the outright reverse repo operations on the open market is intended to enrich China’s monetary policy toolkit, providing a new mechanism for managing financial stability.
The central bank’s decision to implement these operations comes amidst efforts to maintain economic stability and ensure that there is sufficient liquidity in the banking system. This new tool is expected to play a
crucial role in the central bank’s broader strategy to manage money supply and interest rates, thereby supporting the country’s economic objectives.