http://www.zerohedge.com/news/2017-0...ops+to+zero%29
Real Snippet: Short !!! - But wait, that's not all, because also overnight, the PBOC said it provided a "temporary liquidity facility" to some major commercial banks for 28 days to help ease a cash crunch before the Lunar New Year holiday. According to Bloomberg, the operation provides more effective liquidity transmission before the week-long break, the People’s Bank of China said in a statement Friday.
The PBOC said the new lending facility will have a funding cost for banks that’s around the same as open-market operations for a similar 28-day period, which is about 2.55 percent. That means the tool differs from cutting the ratio of deposits big banks must hold in reserve and suggests a fresh evolution of tools policy makers have been overhauling.
Commercial banks had 11 trillion yuan ($1.6 trillion) of sovereign and financial bonds outstanding as of December, Ming said, and have pledged about 43 percent of those to access funding through central bank open market operations, limiting room for further such operations.
The PBOC’s statement Friday didn’t say whether the temporary funding required collateral. Should none be required, that would be unusual because most such tools involve collateral.
The PBOC has shifted toward selective tightening after a two-year easing cycle. President Xi Jinping and other policy makers decided at their annual economic conference last month China should plan prudent and neutral monetary policy this year to prevent financial risks.
"It’s too premature to conclude that there’s a change in China’s monetary policy direction," Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, wrote in a note. "Liquidity management and leverage control seem to be more appropriate expressions to describe the policy direction of China’s central bank."
"It’s likely the central bank will use temporary liquidity facility as a regular tool in the future to ease liquidity shortage before quarter-end or holidays," said Xia Le, chief economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. The PBOC is using a new tool because older ones offer funds at a high cost and longer duration than needed, and it’s wasteful for banks that need money for five days to have to borrow for a full year, Xia said.
While in the past the PBOC has engaged in similar moves ahead of the new year, the latest move suggested there were additional factors involved in draining liquidity: "Today's move seems to suggest that liquidity conditions are tighter than authorities' expectations, as capital outflows remain strong," said Zhou Hau, senior emerging markets economist at Commerzbank in Singapore.
"But in the meantime, an outright easing will add pressure on the yuan exchange rate as well. That could be the reason behind today's strange move."
The central bank will restore the RRR for the five banks to the normal level at an appropriate time after the holiday, according to Reuters' sources. "This is a temporary adjustment, and is mainly in response to the cash withdrawal, tax payment and reserve payment. (The RRR) will go back to the normal rate after the Lunar New Year holiday," one source said.
Benjaminis
Real Snippet: Short !!! - But wait, that's not all, because also overnight, the PBOC said it provided a "temporary liquidity facility" to some major commercial banks for 28 days to help ease a cash crunch before the Lunar New Year holiday. According to Bloomberg, the operation provides more effective liquidity transmission before the week-long break, the People’s Bank of China said in a statement Friday.
The PBOC said the new lending facility will have a funding cost for banks that’s around the same as open-market operations for a similar 28-day period, which is about 2.55 percent. That means the tool differs from cutting the ratio of deposits big banks must hold in reserve and suggests a fresh evolution of tools policy makers have been overhauling.
Commercial banks had 11 trillion yuan ($1.6 trillion) of sovereign and financial bonds outstanding as of December, Ming said, and have pledged about 43 percent of those to access funding through central bank open market operations, limiting room for further such operations.
The PBOC’s statement Friday didn’t say whether the temporary funding required collateral. Should none be required, that would be unusual because most such tools involve collateral.
The PBOC has shifted toward selective tightening after a two-year easing cycle. President Xi Jinping and other policy makers decided at their annual economic conference last month China should plan prudent and neutral monetary policy this year to prevent financial risks.
"It’s too premature to conclude that there’s a change in China’s monetary policy direction," Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, wrote in a note. "Liquidity management and leverage control seem to be more appropriate expressions to describe the policy direction of China’s central bank."
"It’s likely the central bank will use temporary liquidity facility as a regular tool in the future to ease liquidity shortage before quarter-end or holidays," said Xia Le, chief economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. The PBOC is using a new tool because older ones offer funds at a high cost and longer duration than needed, and it’s wasteful for banks that need money for five days to have to borrow for a full year, Xia said.
While in the past the PBOC has engaged in similar moves ahead of the new year, the latest move suggested there were additional factors involved in draining liquidity: "Today's move seems to suggest that liquidity conditions are tighter than authorities' expectations, as capital outflows remain strong," said Zhou Hau, senior emerging markets economist at Commerzbank in Singapore.
"But in the meantime, an outright easing will add pressure on the yuan exchange rate as well. That could be the reason behind today's strange move."
The central bank will restore the RRR for the five banks to the normal level at an appropriate time after the holiday, according to Reuters' sources. "This is a temporary adjustment, and is mainly in response to the cash withdrawal, tax payment and reserve payment. (The RRR) will go back to the normal rate after the Lunar New Year holiday," one source said.
Benjaminis
1