China's central bank on Thursday unveiled a new swap facility to bolster the growth of the country's capital markets, a strategic move which aims to ensure the steady development of China's financial landscape in the long term, according to industry experts.
People's Bank of China announced that it has decided to set up Securities, Funds and Insurance companies Swap Facility (SFISF), with the initial scale of 500 billion yuan (about 71 billion U.S. dollars).
The SFISF will allow eligible securities, funds and insurance companies to use their assets including bonds, stock ETFs and holdings in constituents of the CSI 300 Index as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills, said a statement.
Industry experts anticipate the newly-launched swap facility will inject significant additional funds into the capital market and reduce risks for non-bank entities amid market downturns.
"This greatly enhances the stock holding capacity of securities, funds, and insurance companies, and their ability to acquire funds. Especially when the market is undervalued, these non-bank entities can easily tap into market liquidity using this tool to strengthen their investments in quality assets so as to ensure market stability," said Xu Fei, an analyst of Wanlian Securities, a state-owned securities company.
Sources close to the central bank revealed that the swap facility has a maturity period of up to one year, with provisions for extension upon maturity.
Industry experts further noted the new monetary policy tool applies a "bonds-for-bonds" principle, which does not expand the scale of the base currency, and is not engaged in quantitative easing.
Furthermore, the swap facility enables non-bank entities to exchange less liquid assets for government bonds or central bank bills, making it easier for repurchase or financing sales in the market.
"The swap facility operates on a 'bonds-for-bonds' model, meaning the central bank does not directly inject funds, thereby avoiding an increase in base currency issuance and quantitative easing. While not involving base currency injections, experiences from the global financial crisis underscores the pivotal role of similar facilities, such as the Federal Reserve's Term Securities Lending Facility (TSLF), in swiftly stabilizing financial markets," said Wen Bin, chief economist at Minsheng Bank.
Starting Thursday, applications from eligible securities, funds and insurance companies will be accepted.
China's new 500 billion yuan swap facility to bolster capital market: experts
U.S. President Donald Trump said on Friday that he estimates a deal with Iran will be signed "in the next day or two."
Trump said in an interview with Israel's Channel 12 News that the United States and Iran will probably meet over the weekend to finalize a deal to end the war. "The Iranians want to meet and make a deal," he said.
He said "the naval blockade on Iran is helping to make a deal. I will not lift it until we make a deal," adding that "the biggest part of this deal is that it will make Israel safer. This deal is good for Israel."
According to the channel, one component of the deal under discussion is that the United States will release 20 billion U.S. dollars in frozen Iranian funds.
In exchange, Iran would give up its stockpile of enriched uranium, and would be only allowed to have nuclear research reactors to produce medical isotopes, all above ground.
Trump also stressed that Israel must stop the strikes on Lebanon, saying, "They can't keep blowing up buildings. I'm not going to allow that."
Also on Friday, Trump said in a phone interview with Bloomberg that a deal to end the U.S.-Israeli war with Iran is mostly complete as talks over a lasting peace deal will "probably" be held this weekend in Pakistan.
Trump said in the phone interview that Iran agreed to suspend its nuclear program indefinitely, and will not receive any frozen funds from the United States.
"Most of the main points are finalized. It'll go pretty quickly," Trump said.
Asked if he would travel to Pakistan to sign the potential deal, Trump said: "I may."
Trump again denied that the moratorium on Iran's nuclear program would expire after 20 years. "No years, unlimited," Trump said.
The United States will get all of Iran's nuclear "dust" with no money having exchanged hands "in any way, shape, or form," Trump wrote on social media earlier on Friday. Multiple Western media outlets have interpreted Trump's reference to nuclear "dust" as meaning Iran's stockpile of enriched uranium.
Iran has yet to comment on any deal beyond the reopening of the Strait of Hormuz, nor on claims made by Trump that Tehran had offered concessions, including over the key issue of its nuclear program.
If the United States continues its naval blockade of the Strait of Hormuz, Iran will consider it a violation of the ceasefire between the two countries and will close the waterway, the semi-official Tasnim news agency reported Friday, citing an informed source close to the Supreme National Security Council.
The Iranian side has yet to respond to the media report on the enriched uranium issue.
The United States and Iran had their first round of negotiations in Pakistan's Islamabad last weekend to ease tension in the Middle East. The talks, which failed to produce an agreement, took place after a ceasefire was announced on April 8 between Iran, the United States, and Israel, following 40 days of fighting.
Iran tightened control over the Strait of Hormuz after the United States and Israel launched joint attacks on the country on Feb. 28. The United States also imposed a naval blockade on the strait following the failed negotiations in Islamabad.
Earlier on Friday, both Washington and Tehran confirmed that the strait had been completely open for all commercial vessels. However, Trump said on Truth Social that the U.S. naval blockade would "remain in full force." In response, Iran warned of closing the waterway again if the U.S. blockade continues.
Trump says may sign deal with Iran "in the next day or two": Israeli media
Trump claims peace deal with Iran mostly complete: report
