Starting today until July 31, the People's Bank of China will launch an overnight reverse repurchase operation of 600 billion yuan per day, and an overnight reverse repurchase operation of 300 billion yuan on August 3. Overnight reverse repurchases are an important tool for central banks to carry out open market operations. Their main role is to inject short-term liquidity into the market. In terms of operation, an overnight reverse repurchase involves the central bank first buying marketable securities from large banks and other first-tier traders, which is equivalent to the central bank “lending money” to the market. The next day, traders redeemed the securities from the central bank at the agreed price, and the funds flowed back from the market to the central bank, thus completing short-term liquidity regulation.
Zhitongcaijing · 3d ago
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Starting today until July 31, the People's Bank of China will launch an overnight reverse repurchase operation of 600 billion yuan per day, and an overnight reverse repurchase operation of 300 billion yuan on August 3. Overnight reverse repurchases are an important tool for central banks to carry out open market operations. Their main role is to inject short-term liquidity into the market. In terms of operation, an overnight reverse repurchase involves the central bank first buying marketable securities from large banks and other first-tier traders, which is equivalent to the central bank “lending money” to the market. The next day, traders redeemed the securities from the central bank at the agreed price, and the funds flowed back from the market to the central bank, thus completing short-term liquidity regulation.
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