China’s central bank said that it will use tools to safeguard stability in money markets and that tight liquidity is set to ease, giving the first official signs of relief for a cash squeeze in the world’s second-largest economy.
The People’s Bank of China (PBOC) has provided liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing lending-facility tools to ensure steady markets, according to a statement posted to its website yesterday. It also called on commercial banks to improve their liquidity management.
“We’ll closely monitor the change of liquidity within the banking system going forward, flexibly adjust liquidity management based on international payments and the liquidity demand-and-supply situation,” Ling said at a briefing in Shanghai yesterday. The PBOC will “strengthen communications with market institutions, stabilize expectations and guide market interest rates within reasonable ranges.”