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China Boosts Cash Injection as Demand for Liquidity Jumps -Breaking

by Mike Robinson

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&copy Bloomberg. People’s Liberation Army soldiers pose in front of People’s Bank of China on Monday 13 December 2021 in Beijing. Economists predict China will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for the coming year include counteracting growth pressures and stabilizing the economy.

(Bloomberg). China increased its short-term cash injections to banks system. This was due to rising liquidity demand.

The People’s Bank of China added 200 billion yuan ($31 billion) of cash into the financial system through seven-day reverse repurchase agreements, more than offsetting the 10 billion yuan coming due. After an indicator that short-term borrowing costs rose the most over the past year Monday, this was a signal of liquidity issues in the interbank marketplace.

China’s liquidity situation tends to get tighter towards the end, when banks hold onto cash to make sure they are ready for any regulatory inspections. The PBOC reduced the reserve-requirement ratio earlier this month in an effort to keep cash supply ample and support the nation’s economic recovery from the pandemic. 

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