SHANGHAI: Two market sources with firsthand knowledge of the situation stated on Wednesday that the People’s Bank of China (PBOC) questioned some commercial banks on Monday (July 12) about their demand for medium-term lending facility (MLF) loans. A batch of one-year MLF loans worth 400 billion yuan (US$61.81 billion) is due to mature on Thursday, and the central bank said it will repay the debt with funds freed up by the central bank’s July 15 drop to banks’ reserve requirements.
The People’s Bank of China (PBOC) announced on Friday that it would reduce the amount of cash that banks must retain as reserves, releasing about 1 trillion yuan in long-term liquidity to support the country’s slowing post-COVID economic recovery.
It was unclear how much of the money saved from the RRR cut would be utilized to pay down the MLF loans that were about to mature.
According to the sources, MLF queries do not ensure MLF activities.
Reuters is the source of this information./n
