(MENAFN) The People's Bank of China made an announcement on Sunday regarding its decision to inject two billion yuan (equivalent to USD281.47 million) into the banking system through the reverse repurchase mechanism for a duration of 7 days, offering an interest rate of 1.8 percent. This move, as reported by the Xinhua News Agency, is intended to bolster liquidity levels within the banking system.
In a statement issued by the central bank, the objective behind this action is to enhance liquidity conditions in the banking sector. Reverse repurchases, commonly known as "reverse repo," involve operations wherein the central bank purchases securities from commercial banks through a bidding process, with an agreement to subsequently sell them back to these banks at a later date.
This measure underscores the People's Bank of China's proactive approach to managing liquidity dynamics within the banking system, ensuring stability and supporting financial operations. By providing liquidity through reverse repurchases, the central bank aims to maintain adequate liquidity levels, facilitating smooth functioning of financial markets and fostering economic stability.
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