On June 6, at the headquarters of the People's Bank of China in Beijing, the Central Bank of China (People's Bank of China) made another big move, directly sprinkling 1 trillion yuan into the market, and the tool used was called "buyout reverse repurchase". This is not a small amount, and the money is not lent to the bank, but is bought out directly, which means you don’t have to worry about the money coming back in the short term. The central bank has clearly stated this wave of operation to add some "oil" to the banking system, keep the money bags bulging and prevent liquidity from being too tight.
You may have to ask, why do you have to spend so much money at this time? You will understand after a closer look at the schedule. In June, there was an almost 1.2 trillion yuan buyout reverse repurchase that was about to expire, and the bank had to spit it back. This trillion-dollar operation can just hedge most of the maturing funds, so that the market will not be ischemia all at once. You should know that just two months ago, the central bank was still recycling liquidity. This June was abnormal and it was a big deal to release money, obviously trying to give the market a "peace of mind".
This "buyout reverse repurchase" is a new tool launched last year. It is somewhat similar to the previously commonly used "medium-term lending facility" (MLF), but not exactly the same. In the past, the central bank relied on MLF to provide medium-term funds to the market, but since the buyout reverse repurchase, MLF has been used less. However, the wind direction has changed a bit in recent months. Experts analyzed that banks are not having a good time now, and their profit margins are being suppressed very well. MLF, a tool with a long term and accurate arrival time, can provide banks with more stable expectations, and its operation methods are also flexible, and can take care of the needs of different banks. Maybe MLF will become the protagonist again in the future.
In fact, it is not just buyout reverse repurchase and MLF, but the central bank now has many cards, and treasury bond trading and various structural tools can be used to regulate market money. Although buyout reverse repurchase has tightened a bit in the past two months, the central bank has been putting money into the market and maintaining a relatively loose monetary environment. This 1 trillion operation is more like precise drip irrigation at a special time point, which not only stabilizes liquidity, but also transmits a signal of policy support. It seems that the big ship of the market still needs to continue driving forward under the "escort" of the central bank. Pay attention to avoid losing [Rainbow][Blessing]
