China’s central bank announced on Monday that it had provided emergency funding to commercial banks in response to a spike in cash rates ahead of the Lunar New Year holiday, Reuters reported. People’s Bank of China said that it had provided an unspecified amount of funding to the largest banks via its Short-term Lending Facility and will inject further cash on Tuesday. The interest rate that banks charge each other for short-term loans has spiked in recent days. Analysts say the central bank is trying to avoid an acute credit crunch that could spark panic.
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