China c.bank queries banks on MLF demand

The People’s Bank of China (PBOC) has inquired from several commercial lenders regarding their demand for medium-term lending facility (MLF) loans. This is according to sources close to the issue.

A set of 12-month MLF loans valued at over 400 billion yuan (US$61.81bn) reached maturity on Thursday 15th July 2021. The central bank has indicated that it would apply some of the cash spared through reduced reserves standards towards the repayment of those loans.

An announcement from PBOC on the 9th of July revealed new cuts to the required cash holding for bank reserves, freeing up about 1 trillion yuan in long-term liquidity to bolster the momentum of its post-pandemic economic recovery.

There are no specifics as to how much of the newly freed-up cash would be used for the repayment of MLF loans.

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