CHINA: As it develops a new structural monetary policy tool to support the nation’s capital market, the People’s Bank of China (PBC), the country’s central bank, announced on Thursday the opening of a 500 billion yuan ($70.61 billion) swap facility that permits qualified financial institutions to use assets as collateral to secure liquidity.
A statement on the PBC website states that the organization has chosen to create a Securities, Funds, and Insurance Companies Swap Facility (SFISF) to support the capital market’s healthy and steady development.
According to the statement, this facility enables qualified securities, fund, and insurance companies to exchange their bonds, exchange-traded funds (ETFs), and CSI 300 Index constituent stock holdings for high-liquidity assets like government bonds and central bank bills with the PBC.
The announcement states that the swap facility’s initial scale, set at 500 billion yuan, may be increased in the future based on market trends.
Approved financial institutions may submit applications beginning on Thursday.
At a press conference in Beijing on September 24, PBC Governor Pan Gongsheng unveiled the new policy instrument.
“A second 500 billion yuan and possibly even a third 500 billion yuan could be launched if the first 500 billion yuan is successful. I think this is feasible, and we’re not ruling it out. Only stock market investments may be made with the money acquired under this arrangement, according to Pan.
Following the Chinese government’s statement that it will use many policy measures, including monetary stimulus and support for the real estate market, to accelerate the economy’s recovery, market sentiment has considerably improved.
On Tuesday, the combined turnover of the Shanghai and Shenzhen stock exchanges in China surpassed the 2.59 trillion yuan turnover that was recorded on September 30 and set a new record of 3.45 trillion yuan.
Zheng Shanjie, the head of the National Development and Reform Commission, stated on Tuesday, “We have full confidence in achieving the annual goals and tasks set for economic and social development as well as attaining sustained, healthy economic and social development,”
