BEIJING: The People’s Bank of China (PBOC), China’s central bank, extended a 6-month medium-term lending facility (MLF) worth 250 billion yuan (over $40 billion) at an interest rate of 3.35 percent to 11 banks on Friday.
The extension means the capital will remain in the money market while a total of 384.5 billion yuan worth of MLF in 14 financial institutions came due on the day.
The PBOC said the move was to meet the banks’ capital need and maintain the liquidity in banking system at a sufficient level, aswell as encourage banks to increase support to key sectors and weak points of the economy.
The MLF is one of the fresh liquidity tools the central bank invented in 2014 to help commercial and policy banks maintain liquidity.
On Thursday, the PBOC conducted 35 billion yuan worth of 7-day reverse repos at a yield of 2.5 percent to inject liquidity into the market.
