PBOC activates open market outright reverse repo operations facility

The PBOC's announcement said its new tool would have a tenor of less than one year

China's central bank announced on Monday it had activated its open market outright reverse repo operations facility and would use it to trade with primary dealers in open market operations on a monthly basis.

The bank took the decision to maintain a "reasonable abundance of liquidity in the banking system and further enrich the central bank's monetary policy toolbox," it said in a statement.

State-owned Shanghai Securities News said in an article published shortly after the People's Bank of China's (PBOC)notice that the facility was expected to cover three- and six-month tenors and that it would aid liquidity adjustments over the next year, citing people close to the central bank.

The PBOC's announcement said its new tool would have a tenor of less than one year.

"The central bank's choice to launch this new tool at this time is also expected to be a better hedge against the concentrated expiry of medium-term lending facility before the end of the year," the article said.