(Yicai Global) Sept. 11 -- The People's Bank of China pulled CNY10 billion (USD1.46 billion) in liquidity from the financial system today, after net injecting cash into it for four straight days.
The central bank carried out CNY90 billion in seven-day reverse repo operations today against a maturing CNY100 billion from the previous operation, effectively sidelining the CNY10 billion.
The bank has net injected a total CNY240 billion of cash into the system in the first four days of this week in similar operations. The regulator net withdrew CNY470 billion last week.
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 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