(Yicai Global) Oct. 22 -- The People's Bank of China maintained the balance of liquidity in its banking system today via an open market operation, following a cumulative net injection of CNY200 billion of cash earlier this week.

The central bank conducted a seven-day reverse repo of CNY50 billion at a 2.2 percent interest rate today against an equal amount of previous ones maturing.
The purpose of the operation is to keep the liquidity of its financial system "reasonably ample," the regulator reiterated in a statement today.

A reverse repo is a process by 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.

China will continue to pursue a prudent monetary policy and financial policies that have been proven effective in mitigating the Covid-19’s economic shocks, Yi Gang, the central bank’s governor, said yesterday at the Annual Conference of Financial Street Forum 2020.

Editor: Ben Armour