China Orders Big Banks to Curb Interbank Lending to Defend Policy Rate
Updated
Updated · Bloomberg · Jun 12
China Orders Big Banks to Curb Interbank Lending to Defend Policy Rate
1 articles · Updated · Bloomberg · Jun 12
Summary
China has told major state-owned banks to cut lending in the interbank market, according to people familiar with the matter, marking a fresh effort to absorb excess liquidity.
The People’s Bank of China recently instructed financial institutions, including policy banks, to strictly control their net lending to other banks.
The move aims to stop short-term borrowing costs from falling too far below the central bank’s policy interest rate, signaling concern that a cash glut is distorting money-market pricing.