Latest News:  


Central bank to introduce SLO

By Qiu Chen (Global Times)

08:31, January 21, 2013

The People's Bank of China (PBC) will allow 12 commercial banks to request shorter-term repurchase agreements (repos) and reverse repos, in addition to the instruments it already routinely offers during the open market operations (OMO) it conducts Tuesdays and Thursdays, the central bank announced in a statement Friday, a move which will allow the central bank to act more promptly when it comes to adjusting liquidity, experts told the Global Times Sunday.

The PBC could start carrying out Short-term Liquidity Operations (SLO) from Monday, offering repos and reverse repos with maturity periods less than seven days, according to the bank's statement. Repos and reverse repos, together with longer-term central bank bills, are the instruments most commonly used by the central bank to ensure market liquidity and control short-term money rates. In recent months, the PBC has almost always set the periods of the repos and reverse repos from between 7 days and 28 days.

As a supplement to the routine OMO scheduled for Tuesdays and Thursdays, short-term instruments will be employed to increase the flexibility of OMO when there are temporary fluctuations in the amount of money within the market, the central bank added.

This move underscores just how important OMO have become to China's central bank in terms of monetary policy, Guo Tianyong, director of the Research Center of China Banking at Central University of Finance and Economics, told the Global Times.

The 12 authorized banks - which include the country's four largest State-owned banks and eight medium-sized ones - are now required to hand over their liquidity requests every trading day, the Securities Times reported, citing insiders from State-owned lenders. In the past, the PBC queried 37 primary traders about liquidity demand Mondays and Wednesdays.

Now that the central bank may offer reverse repos more often, it is expected that the PBC will trim the reserve requirement ratio (RRR) for banks less frequently, said Guo.

China's central bank began showing a preference for repos and reverse repos last year, when it phased out central bank bills. "Repos and reverse repos are favored now because they offer more flexibility," Guo explained.

We recommend:

Online turnover surpasses 1 trillion yuan in 2012

Jack Ma to step down as Alibaba CEO

FDI sees 1st decrease in 9 years amid slowdown

China helps drive Rolls to record year

Top Ten Economic Events in 2012

CIC seeks balanced portfolio


Leave your comment0 comments

  1. Name


Selections for you

  1. Mumbai in lens

  2. Carnival-related products sell like hot cakes in Brazil

  3. Curd eating competition held in India

  4. Photos: Chinese Style in 2012

  5. They made 2012 warm and beautiful

  6. Hangzhou Lingyin Temple distributes porridge, causing disorder

  7. Miss Chinese Africa beauty contest

  8. Scenery of Wuyuan at dawn after rainfall

  9. Sales boosting measures taken for Chinese Spring Festival

  10. New incredible deep sea photo

Most Popular


  1. Labor shortage hits cities as holiday nears
  2. Reaching out to sympathetic Japanese
  3. The fall and rise of James Bond
  4. Intervention in Mali
  5. Proposal to help Chinese 'gay wives' stirs debate
  6. Tax wrong weapon to combat home prices
  7. What you may not know about studying abroad
  8. Encircling China just Japan's wishful thinking
  9. Editorial: Prudence in urbanization
  10. Japan PM Abe's regional trip 'targets China'

What’s happening in China

'Collective children's weddings' held in kindergarten

  1. Highly educated cleaners start jobs in Harbin
  2. Statistician suggests "scientific" population policy
  3. 11 injured in N China fireworks store explosion
  4. Railway police nab 5,144 drug smugglers
  5. Seven dead in Foxconn bus accident