SHANGHAI, Jan 30 China's central bank on
Thursday announced details of the Short-term Liquidity
Operations (SLO) it conducted in December, revealing that it had
used this method to both inject and withdraw liquidity from the
interbank money markets.
The injections occurred during late December, when the
interbank market suffered a liquidity squeeze, sending money
rates to six-month highs.
Thursday's announcement marks the first time that the bank
used SLO to withdraw funds. Previous operations were all used to
The People's Bank of China (PBOC) launched SLOs last year to
supplement its other monetary policy tools. The facility is
mainly used to provide one- to three-day loans to commercial
banks, though loans with other maturities are occasionally used.
Unlike open market operations conducted via auction of
central bank bills and bond repurchase agreements, SLOs are not
publicly announced at the time they are conducted.
When the new mechanism was launched, the PBOC said it would
publicly disclose details of its operations no later than the
end of the following month.
Following is a table summarising the PBOC's SLOs in
Date Operation Maturity Amount Average
type (days) (billions interest
of yuan) rate (pct)
Dec. 18 Injection 2 100 4.20
Dec. 19 Injection 4 60 4.70
Dec. 20 Injection 4 150 4.70
Dec. 23 Injection 3 180 5.00
Dec. 24 Injection 1 30 4.20
Dec. 24 Injection 3 103 4.30
Dec. 30 Withdrawal 3 150 3.00
Dec. 31 Withdrawal 2 100 3.00
(Reporting by Gabriel Wildau; Editing by Jacqueline Wong)