SHANGHAI, June 25 (Reuters) – China’s central bank will add overnight reverse repo tools in open market operations, it said on Thursday, taking steps to improve the way it manages short-term interest rates.
New reverse repo operations will be conducted on June 29 and June 30, through quantity bidding at fixed interest rates, to “better meet short-term liquidity needs in the banking system”, the People’s Bank of China said in a statement.
The move came a week after PBOC Governor Pan Gongsheng said during a forum that the bank would increase the variety of overnight reverse repo operations to better manage liquidity.
Pan also said the PBOC was studying a liquidity tool to support non-banking financial institutions in a crisis, seeking to balance the need to maintain financial stability and prevent “moral hazard”.
(Reporting by Shanghai and Beijing newsroom; Editing by Christopher Cushing and Kate Mayberry)
