China’s central bank, the People’s Bank of China (PBOC), conducted a reverse purchase operation worth 1.1 trillion yuan (CNY), equivalent to a total of $157 billion (USD). The objective is to maintain sufficient liquidity in the banking system.
The operation was carried out on Thursday through auctions at various price levels and interest rates with a three-month maturity. As reported by the central bank itself, the amount is fixed, which reduces uncertainty and limits volatility in the interbank market.
A reverse repurchase transaction occurs when: Central banks inject money into the financial system in exchange for a title. At maturity, the company buys back those assets and returns the cash with interest.
Through this mechanism, the People’s Bank of China provides temporary liquidity without changing the official benchmark interest rate. Therefore, it may affect your short- and medium-term financial position.
This operation is due to the 3-month reverse repo of 1.1 trillion yuan maturing in January. roll. In other words, the central bank Replace expired amounts with new amounts exactly.
Wang Qing, chief macroeconomic analyst at Golden Credit Ratings, believed China’s latest move reflects the continuation of favorable monetary policy. As he explained, it will facilitate the issuance of government bonds in early 2026.
Direct reverse repo operations were introduced in October 2024 to manage domestic liquidity. These are conducted monthly and do not exceed one year in duration.
As explained by CriptoNoticias, here’s what happens when it comes to Bitcoin (BTC) and the cryptocurrency market. Increased liquidity typically drives price impulses. Therefore, this move by the Chinese central bank could be beneficial for this asset class.
Even considering that crypto trading is prohibited in China, injecting liquidity into the Chinese currency could indirectly impact the price of Bitcoin.
