China’s central bank extended support on Friday to a group of unnamed but large banks, in the form of a new monetary-policy tool, without much fanfare. Departing from its usual modus operandi ahead of the weeklong lunar New Year holiday in China when it pumps in cash, the People’s Bank of China extended a longer-term but temporary liquidity facility instead. Details on the facility were typically vague. In recent weeks it has also injected record amounts of cash.
The move gives banks some breathing room for now, just as interbank liquidity stresses escalate. The new facility, analysts from ANZ say, doesn’t require banks to post collateral like other facilities typically do.