The telegraph.co.uk reports that analysts say move by Chinese authorities help stabilise a shaky economy after a weak start to the year.
China’s central bank is injecting a combined 500 billion yuan (£50bn) of liquidity into the country’s top banks, according to media reports, a sign that authorities are stepping up efforts to shore up a faltering economy.
The Wall Street Journal, citing an unnamed Chinese bank executive, said the People’s Bank of China (PBOC) is pumping in 100 billion yuan each into China’s top five banks via standard lending facility in the form of 3-month loans. Officials at the PBOC could not be reached for comment.
“We think the latest SLF [Standing Liquidity Facility] is mainly aimed at providing liquidity to pre-empt potential liquidity shortages in the banking system in the coming weeks,” Jian Chang, China economist at Barclays Capital in Hong Kong, said in a research note.
Still, a liquidity injection of this scale does have the effect of easing overall credit conditions and helps to stabilise a shaky economy after a weak start to the year. Some analysts believe the reported move shows the PBOC’s continued willingness to use targeted steps, rather than large-scale stimulus or interest rate cuts, to support growth.
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