China conducts 500-bln-yuan MLF operation to sustain banking liquidity

BEIJING, June 25 (Xinhua) -- The People's Bank of China (PBOC) on Thursday carried out a 500-billion-yuan (about 73.3 billion U.S. dollars) one-year medium-term lending facility (MLF) operation, 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 300-billion-yuan MLF maturing this month, the move will see a net injection of 200 billion yuan, according to the central bank.

This will help meet financial institutions' demand for longer-term funds, support the smooth issuance of government bonds, and enable banks to ramp up credit supply, said Wang Qing, chief macro analyst at Golden Credit Rating.

The PBOC also announced that it will add overnight reverse repo operations to its open market toolkit on June 29 and June 30, to better accommodate banks' short-term liquidity demand. The operations will use a fixed-rate, quantity-tendered format.