Explainer | How will unconventional tools unveiled by Beijing help support China’s stock markets?
People’s Bank of China governor says it is the first time central bank has ‘innovated structural monetary policy tools to support the capital market’
A total of 800 billion yuan (US$111.53 billion) will be put in place to “maintain the stability of the country’s capital market and boost investor confidence”, China’s central bank governor, Pan Gongsheng, said.
“This is the first time the People’s Bank of China has innovated structural monetary policy tools to support the capital market,” Pan told a news conference, adding that the PBOC had learned from international experience.
That included setting up a 500 billion yuan swap facility for brokers and funds to buy stocks, and a 300 billion yuan refinancing facility for stock buy-backs.
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What is the 500 billion yuan swap facility?
The tool has been created to allow institutional investors to facilitate market transactions and boost market liquidity.
