people bank of china

Highlights of Monetary Policies in Q1, 2019

On January 4, the People’s Bank of China (PBC) announced to lower the reserve requirement ratio for financial institutions by 1 percentage point, 0.5 percentage point of which was cut on January 15, 2019 and a further 0.5 percentage point on January 25, 2019. In addition, the Medium-Term Lending Facilities (MLF) due to mature in the first quarter was not renewed.

On January 17, under the guidance of the PBC, the National Association of Financial Market Institutional Investors (NAFMII) organized its members to formulate the Guidelines on Debt Financing Instruments of Overseas Non-Financial Enterprises (for Trial Implementation), promoting the well-regulated development of debt financing instruments of overseas non-financial enterprises and further opening up the interbank bond market.

On January 23, the PBC reported to the Financial and Economic Affairs Committee under the National People’s Congress on the implementation of monetary policies in 2018.

On January 23, the PBC conducted Targeted Medium-term Lending Facility (TMLF) operations of RMB257.5 billion for Q1, 2019, aiming to ensure long-term and stable financing from financial institutions to private enterprises and small and micro businesses with preferential interest rates.

On January 24, the PBC announced to launch the Central Bank Bills Swap (CBS) to provide liquidity support for banks’ capital bonds without fixed terms, namely perpetual bonds, and include qualified perpetual bonds as eligible collateral for the central bank. On January 25, Bank of China issued the first bank perpetual bond in China with a scale of RMB40 billion, the bid-to-cover ratio over 2, and the interest rate at the lower end of the range. On February 20, the PBC conducted the first CBS operation with primary dealers of open market business; valued at RMB1.5 billion, the swap will be due in 1 year with a rate of 0.25%.

On January 29, to earnestly improve the efficiency and quality of finance to serve rural vitalization, the PBC, the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC), the Ministry of Finance (MOF), and the Ministry of Agriculture and Rural Affairs (MARA) jointly released the Guidelines on Finance Serving Rural Vitalization (Yinfa No.11 [2019] ).

China Securities Regulatory Commission
China Securities Regulatory Commission

On February 11, the PBC renewed the bilateral local currency swap agreement with Centrale Bank van Suriname. The size of the swap facility is RMB1 billion or SRD1.1 billion.

On February 13, the PBC successfully issued three-month and one-year RMB-denominated central bank bills, both worth RMB 10 billion with a coupon of 2.45% and 2.80% respectively.

On February 21, the PBC issued the China Monetary Policy Report (Q4 2018).