The People's Bank of China, the country's central bank, debuted a 300-billion-yuan (44.15-billion-U.S.-dollar) overnight reverse repo on Monday to better accommodate banks' short-term liquidity demand.
Overnight reverse repo operations means the central bank purchases securities from primary dealers such as large banks the day before, and traders redeem the securities from the central bank again at an agreed price the next day, thus realizing a one-day liquidity regulation. Experts said that overnight reverse repo operations will not only better meet the cross-quarter liquidity demand at the end of the first half of the year, but also play as an important measure to promote transformation of the monetary policy framework.
"At the end of June, the banking system was confronted with a funding gap caused by seasonal assessment. Overnight reverse repos could more effectively deal with temporary liquidity pressure at the end of the month and quarter. The overnight reverse repo can supplement the tool with a term of one day, which is conducive to improving the mechanism for short-end interest rates regulation," said Dong Ximiao, chief economist at the Merchants Union Consumer Finance Co., Ltd.
"It can form a term matching with the existing seven-day reverse repo, meeting different scenarios of the banking system's capital demands and promoting stable and orderly operation of the financial market," he said.
China debuts overnight reverse repo to match short-term liquidity demands
Chinese Premier Li Qiang emphasized advancing agricultural modernization and ensuring food security when making investigation in northeast China's Heilongjiang and Jilin provinces from Monday to Wednesday.
In Heilongjiang Province, Li, also a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee, visited a state farm and observed the growth of soybean, corn, and rice crops. He stressed that autumn grain accounts for the bulk of annual output, calling for stepped-up farmland management and policy support to ensure grain harvest.
Visiting an agricultural science park and a rice research institute, Li asked about seed breeding innovation and black soil conservation, highlighting the importance of science and technology in pursuing higher yields and calling for further efforts in seed breeding, advanced machinery, and smart farming.
At a major water conservancy project, Li reviewed construction progress, urging faster completion to improve flood control, irrigation, and ecological benefits while supporting stable, high-yield harvests.
In Jilin Province, Li visited an agricultural cooperative and learned about its operations. He called for developing diverse forms of appropriately scaled agricultural operations and improving services for agriculture to help smallholders connect with modern agriculture.
At a grain processing plant, Li inspected a corn oil production line and called for boosting intensive processing of agricultural products to extend industrial chains and raise value.
Li also visited the Chagan Lake and learned about the ecological fisheries. He called for actively developing modern eco-aquaculture, promoting integrated development of the farming, forestry, livestock, and fishing industries as well as the development of eco-tourism.
Chinese premier stresses agricultural modernization, food security
