The People’s Bank of China (PBC) announced on Thursday the introduction of a 500 billion yuan (approximately US$70.61 billion) swap facility aimed at enhancing liquidity for eligible financial institutions. This initiative is part of the central bank’s strategy to implement a new structural monetary policy tool to support the country’s capital market.
The newly established Securities, Funds, and Insurance Companies Swap Facility (SFISF) is designed to promote the stable development of the capital market, as stated in a release on the PBC’s website.
This facility allows qualified securities, fund, and insurance companies to exchange their holdings of bonds, stock exchange-traded funds (ETFs), and stocks from the CSI 300 Index for high-liquidity assets such as government bonds and central bank bills.
Initially set at 500 billion yuan, the swap facility could be expanded in the future depending on market conditions, according to the announcement. Starting Thursday, eligible financial institutions are invited to submit their applications.
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PBC Governor Pan Gongsheng introduced this new policy tool during a press conference in Beijing on September 24. He noted, “If the initial 500 billion yuan is successful, we could consider a second and even a third round of the same amount. The funds obtained through this facility can only be used for investments in the stock market.”
Following the Chinese government’s recent announcements regarding various policy measures, including monetary stimulus and support for the property market, market sentiment has improved markedly. The combined turnover on China’s Shanghai and Shenzhen stock exchanges reached 3.45 trillion yuan on Tuesday, surpassing the 2.59 trillion yuan recorded on September 30 and marking a new high.
Zheng Shanjie, head of the National Development and Reform Commission, expressed confidence in achieving the economic and social development goals set for the year, emphasizing the commitment to sustained and healthy growth.
