On February 19, the People’s Bank of China carried out a RMB 489.2 billion reverse repurchase operation at a fixed interest rate of 1.5% on February 18 to hedge the liquidity withdrawal pressure brought by the maturity of the RMB 500 billion medium-term lending facility (MLF) on that day and ensure that the banking system has sufficient funds. Since the beginning of the year, the amount of funds raised by banks has significantly decreased, while the stable amount of funds raised by monetary funds and wealth management products has led to new characteristics in the market’s capital structure. Industry insiders have stated that under the influence of multiple disruptive factors such as government bond issuance, tax periods, and MLF maturities, the funding situation may remain in a “tight balance” state, but potential buyout style buybacks may provide some support for liquidity. (Shanghai Stock News)
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