Banks bid for US$2.5bn in government deposits

The Chinese government said Wednesday that it had given the country's commercial banks the chance to bid for around US$2.5 billion in funds, the Wall Street Journal reported. A total of 51 banks took part in the auction for 90-day deposits that will pay 2.7% annual interest, although the government didn't reveal which lenders had been successful. This is a break with the standard policy under which official funds are held by the People's Bank of China. The auction may represent only a fraction of total government holdings but it is another step toward winding down the central bank's commercial activities. The move will also save the central bank money as it won't have to pay as much interest on government funds.