BEIJING/HONG KONG, June 21 China's commercial
banks should not expect plentiful liquidity conditions forever
and the central bank will not change its prudent monetary policy
stance, central bank officials told an internal meeting of
bankers earlier this week, sources with knowledge of the meeting
said on Friday.
China's money markets have been roiled this week as the
central bank has held back from pushing cash into a tight
market, with analysts saying the central bank wants to send a
stern warning to banks that it believes are using short-term
funding for trading rather than lending.
The central bank has also required commercial banks to
enhance their management of liquidity, especially for big banks,
who should play the role of stabilising the market, the four
sources said the central bank told the meeting.
The central bank did not immediately reply to several
requests for comment.
China's money market squeeze that began early this month has
worsened this week, forcing banks and other financial
institutions to trim non-essential businesses, traders said.
(Reporting by Beijing and Hong Kong economics teams; Editing by
Jonathan Standing and John Mair)