FX.co ★ PBOC Injects CNY 700 Billion Net Liquidity Through MLF

The People’s Bank of China (PBoC) infused CNY 900 billion (approximately USD 128.54 billion) into the financial system on January 23 via its one-year Medium-Term Lending Facility (MLF). This initiative aimed to ensure sufficient liquidity within the banking sector. Considering that CNY 200 billion in MLF funds were due to mature this month, the PBoC’s maneuver effectively led to a net liquidity injection of CNY 700 billion. Notably, this marks the eleventh successive month of net MLF injections. The central bank executed this operation utilizing a fixed-quantity, interest-rate bidding, along with a multiple-price bidding method. Noteworthy is that the net injection for this month surpassed December’s, which stood at CNY 100 billion. The MLF, originated in 2014, serves to assist commercial and policy banks in maintaining liquidity by permitting them to borrow from the central bank with securities as collateral.