June 21, 2013 / 7:11 AM / 4 years ago

China c.bank tells banks liquidity won't always be plenty-sources

BEIJING/HONG KONG, June 21 (Reuters) - 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)

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