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People's Daily Online>>China Business

PBOC halts bill issue before Lunar New Year


11:52, January 07, 2012

BEIJING - The People's Bank of China (PBOC), the country's central bank, said Friday it will suspend sales of bills in the open market to ensure bank liquidity ahead of the week-long Lunar New Year holiday in late January.

The PBOC said it will conduct short-term reverse-repurchase agreement operations "if necessary" to inject money into banks through purchases of securities with an agreement to resell them at future dates, according to a statement posted on its website.

"The central bank's move to suspend bill sales is intended to prevent a tightening of liquidity in the banking system," said Professor Guo Tianyong, director of the Banking Research Center at the Central University of Finance and Economics.

Increasing demand for cash ahead of the Lunar New Year has already begun to squeeze banks' liquidity.

The PBOC suspended open market operations for two weeks after its last sales of one-year bills for 2011 on Dec 27.

The central bank injected 51 billion yuan ($8.07 billion) into the banking system this week, the biggest liquidity injection in two months, to help banks meet customers' soaring demand for cash during the holiday.

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