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China central bank queries banks on MLF demand

The People's Bank of China (PBOC) asked some commercial banks on Monday about their demand for medium-term lending facility (MLF) loans, two market sources with direct knowledge of the matter said on Wednesday.

China central bank queries banks on MLF demand

FILE PHOTO: Headquarters of the People's Bank of China (PBOC), the central bank, is pictured in Beijing, China September 28, 2018. REUTERS/Jason Lee

SHANGHAI: The People's Bank of China (PBOC) asked some commercial banks on Monday (Jul 12) about their demand for medium-term lending facility (MLF) loans, two market sources with direct knowledge of the matter said on Wednesday.

A batch of 400 billion yuan (US$61.81 billion) worth of one-year MLF loans is due to mature on Thursday, and the central bank said it would use some of the funds freed from its cut to banks' reserve requirements, effective on July 15, to repay the debt.

The PBOC said on Friday that it would cut the amount of cash that banks must hold as reserves, releasing around 1 trillion yuan in long-term liquidity to underpin its post-COVID economic recovery that is starting to lose momentum.

It was not clear how much cash from the RRR cut would be used to repay the maturing MLF loans.

And the sources said such MLF queries did not guarantee MLF operations.

Source: Reuters

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