China's Central Bank Withdraws 62.2B Yuan Liquidity
PBoC withdrew 62.2B yuan liquidity via reverse repos; Finance Ministry to renew 750B yuan in treasury bonds, no fiscal deficit increase.
The People's Bank of China (PBoC) executed a reverse repurchase agreement of 118.6 billion yuan on Wednesday, December 11, keeping the interest rate at 1.4%. Following the maturity of 180.8 billion yuan in reverse repos on the same day, this resulted in a net liquidity withdrawal of 62.2 billion yuan from the financial system.
Simultaneously, the Chinese Ministry of Finance announced it would renew treasury bonds maturing on Friday, amounting to 750 billion yuan. The same amount will be issued to designated banks in the interbank market, comprising 400 billion yuan in 10-year bonds and 350 billion yuan in 15-year bonds. The entire yield will be used solely for repaying the principal of the maturing bonds.
The ministry confirmed that this operation is a like-for-like replacement and does not expand the fiscal deficit.
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