In the Wall Street Journal over the weekend an article on the minutes of a PBOC meeting last week

Concerns about the yuan and the annual cash crunch ahead of next month's Lunar New Year holiday dominated

Says the PBOC "delayed using a traditional credit-easing tool" (that would be the RRR cut we're all awaiting) "for fear that it could add more downward pressure on the yuan"

  • Instead the bank used short-term and medium-term loan facilities
  • Injected about 1.6 trillion yuan ($243 billion) of temporary liquidity into the banking system in the past week

(If that sounds familiar it might be 'cause I posted on it 5 days ago!)

The Journal says the report is based on "minutes of the meeting reviewed by The Wall Street Journal and to accounts from banking executives close to the PBOC"

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More:

  • A reduction in reserve-requirement ratio (the RRR) frees up funds for banks to lend on a permanent basis, while injecting liquidity through short-term and medium-term tools means the money can be taken back by the central bank when those loans expire
  • The PBOC "decided to put off the reserve-requirement cut until late," one of the executives said. The executive said the central bank would have to make the cut "at some point" because the surge in money leaving China, as well as the PBOC's efforts to buy yuan to prop up its value, are squeezing liquidity