BEIJING — China’s central bank skipped open market operations on May 11, citing sufficient liquidity in the banking system.
Liquidity in the banking system was at a “relatively high” level, said the People’s Bank of China (PBOC) on its website.
Twenty billion yuan (about $3.1 billion) of reverse repos matured on May 11, meaning that market liquidity will drop by the same amount. A total of 140 billion yuan of liquidity has been drained from the market this week.
A reverse repo is a process by which the central bank bids for and buys securities from commercial banks, with an agreement to sell them back in the future.
The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.
China has vowed to maintain a prudent and neutral monetary policy in 2018 to balance growth and risk prevention.