(Yicai Global) Nov. 4 -- The People's Bank of China kept the liquidity in China’s banking system balanced today via an open market operation, following a net CNY20 billion injection yesterday.

The central bank conducted a seven-day reverse repo of CNY120 billion at a 2.2 percent interest rate today against an equal amount of previous ones maturing.

The purpose of this operation is to keep the liquidity of its financial system "reasonably ample," the regulator reiterated in a statement today.

The bank made a cumulative net injection of CNY190 billion liquidity into the financial market system via open market operations last week.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future. In this way, commercial banks can raise short-term capital. It is the equivalent of a short-term loan with the securities.

Editor: Ben Armour