People’s Bank of China (PBOC) Gov. Pan Gongsheng said Monday, Oct. 19, that the central bank is preparing a high-grade-collateral facility to contain liquidity strains at asset managers.
At a Beijing forum, Pan said the PBOC is developing the measure with the National Financial Regulatory Administration (NFRA) and China Securities Regulatory Commission (CSRC). Access would be limited to cases of group liquidity stress at asset managers, when redemptions and bond sell-offs compound the pressure.
Possible users are bank wealth-management subsidiaries and public fund managers, together with their parent banks and parent securities firms. Access would also hinge on macroprudential standards. Pan said those safeguards should curb market-price distortions, uphold market discipline and discourage assumptions that the facility would guarantee support.
The PBOC had previously outlined a nonbank redemption backstop. Separately, Pan said 30 institutions now operate the digital yuan (e-CNY), up from 10, including all banks designated systemically important in China.
The PBOC plans to provide operating terms in future announcements on open market operations. The speech set no release date.
