Liquidity Issues in China?

March 21st, 2017 7:44 am | by John Jansen |

Via Bloomberg:

PBOC Said to Inject Liquidity After Interbank Payments Missed
2017-03-21 10:33:19.211 GMT

By Bloomberg News
(Bloomberg) — China’s central bank injected hundreds of
billions of yuan into the financial system after some smaller
lenders failed to repay borrowings in the interbank market,
according to people familiar with the matter.
Tuesday’s injections followed missed interbank payments on
Monday, the people said, asking not to be identified because the
matter isn’t public. The institutions that missed payments
included rural commercial banks, according to three traders who
asked not to be identified because they aren’t authorized to
speak publicly. One said a borrower failed to repay an overnight
repo of less than 50 million yuan ($7.3 million).
China’s smaller lenders have been squeezed by a rise in
money market rates this week, with the benchmark seven-day
repurchase rate jumping to the highest level since April 2015 on
Tuesday. While the tightening of liquidity reflects factors
including quarter-end regulatory checks and a wall of maturing
certificates of deposit, Banco Bilbao Vizcaya Argentaria SA said
the People’s Bank of China may also be sending a message to
over-leveraged firms to rein in borrowing.
“The PBOC wants to warn the smaller lenders not to play the
leverage game excessively,” said Xia Le, chief economist at BBVA
in Hong Kong. “It’s a tug of war between the central bank and
the financial institutions.”
The PBOC declined to comment on the operations.

Be Sociable, Share!

Post a Comment