China central bank continues to inject liquidity via reverse repos

BEIJING - China's central bank on Wednesday continued to pump cash into the banking system via reverse repos to maintain liquidity.

The People's Bank of China injected 60 billion yuan ($8.49 billion) into the market through seven-day reverse repos at an interest rate of 2.2 percent, according to a statement on the website of the central bank.

The move aims to keep liquidity in the banking system at a reasonably sufficient level, the central bank said.

As no reverse repos matured Wednesday, the operation led to a net injection of 60 billion yuan into the market.

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.

China will pursue a prudent monetary policy in a more flexible and appropriate way, according to this year's government work report.

The country will use a variety of tools including reserve requirement ratio cuts, interest rate reductions and re-lending to enable M2 money supply and aggregate financing to grow at notably higher rates than last year, said the report.