(Yicai Global) Jan. 15 -- China's central bank the People’s Bank of China net injected CNY197 billion (USD30.45 billion) of fresh liquidity via an open market operation today to keep the liquidity of its financial system "reasonably ample."

The regulator conducted today’s open market operation by applying its medium-term lending facility market tool, as well as its regular seven-day reverse repo operation.

The regulator pumped CNY500 billion liquidity into the financial system via one-year MLF loans today, against CNY300 billion of previous ones maturing, thus, in effect, net injecting CNY200 billion cash into the system.

The PBOC created the MLF operation in 2014 to provide liquidity to support qualified commercial banks whose businesses focus on economic activities in small cities or rural areas. It usually carries out such operations once or twice each month.

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The bank also conducted CNY2 billion (USD390 million) in seven-day reverse repo operations today against CNY5 billion maturing from a previous operation, thus effectively draining CNY3 billion of fresh funds from the system.

Overall, the two operations net injected CNY197 billion cash.

The regulator was planning to use today’s MLF operation to offset the two maturing previous operations including CNY300 billion MLF that matured today as well as a CNY240.5 billion Targeted Medium-term Lending Facility operation that came to term on Jan. 25, the PBOC said in a statement.

The Targeted Medium-term Lending Facility is a special type of medium-term lending facility that provides liquidity to qualified large commercial banks to specifically extend loans to targeted small and mini enterprises. Its interest rate is usually several percentage points lower than the MLF operations. Its term are also usually longer.

Factoring in the TMLF maturing on Jan. 25, today’s MLF operation will have net withdrawn CNY40.5 billion in cash out of the system this month.

The central bank yanked CNY36 billion liquidity out of the banking system through open market operations during the first four days of this week following a net withdrawal of CNY505 billion last week.

Editor: Ben Armour, Xiao Yi