China central bank to add overnight reverse repo tools next week

China's central bank will add overnight reverse repo tools in open market operations, it said on Thursday, taking steps to improve the way it manages short-term interest rates.

New reverse repo operations will be conducted on June 29 and June 30, through quantity bidding at fixed interest rates, to "better meet short-term liquidity needs in the banking system", the People's Bank of China said in a statement.

The move came a week after PBOC Governor Pan Gongsheng said during a forum that the bank would increase the variety of overnight reverse repo operations to better manage liquidity.

Pan also said the PBOC was studying a liquidity tool to support non-banking financial institutions in a crisis, seeking to balance the need to maintain financial stability and prevent "moral hazard". 

Reuters

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