China to conduct 600-bln-yuan MLF operation to sustain banking liquidity

BEIJING, May 22 (Xinhua) -- The People's Bank of China on Friday announced that it will carry out a 600-billion-yuan (about 87.7 billion U.S. dollars) one-year medium-term lending facility (MLF) operation on May 25, aiming to maintain adequate liquidity in the country's banking system.

The central bank said this MLF operation will be conducted through variable-rate tenders with a fixed quantity, using a multiple-price auction.

With a 500-billion-yuan MLF maturing this month, the move will result in a net injection of 100 billion yuan.

Wang Qing, chief macro analyst at Golden Credit Rating, noted that the net injection of medium-term liquidity will help meet financial institutions' demand for longer-term funds, supporting bank credit supply and the smooth issuance of government bonds.

The MLF was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank by using securities as collateral.