China Economic Review

China gives banking system $74 billion injection

The People’s Bank of China supplied the country’s banking sector with an additional Rmb 502 billion ($74 billion) on Monday, the Financial Times reports, continuing a series of moves by Beijing to ease monetary policy amid rising economic threats including a trade war with Washington.

The injection will be made via the central bank’s Medium-term Lending Facility (MLF) – a lending mechanism that offers commercial banks three- to twelve-month loans. This will be the largest injection made to date using the MLF tool.

This is the second time in two months that the People’s Bank has attempted to boost the economy through a cash injection. In late June the bank freed up Rmb 700 billion for commercial banks by lowering the reserve requirement ratio.

With the prospect of slowing demand in key sectors such as housing and cash-flow concerns rising throughout areas of the nation’s banking sector, Beijing will hope Monday’s injection will provide some liquidity relief whilst not reversing its policy of wider deleveraging.