In just two days .. China is pumping 100 billion dollars into its banking system

The Central Bank of China continued to inject large amounts of cash into the banking system for the second day in a row, as it pumped 385 billion yuan (53.58 billion dollars) on Tuesday, through 7-day reverse repurchases at an interest rate of 1.8 percent, after yesterday pumping 332 billion yuan (46.2 billion dollars).

The “Xinhua” agency quoted the central bank as saying that the move is aimed at maintaining acceptable and abundant cash liquidity in the banking system by the end of the month.

Reverse repurchases, known as”reverse repo”, are operations in which the central bank buys securities from commercial banks through bidding, with an agreement to sell them again in the future, this comes at a time when the Chinese authorities are taking a series of measures aimed at stimulating activity in various sectors of the economy as the central bank issued national directives to ease the terms of mortgage loans to specific categories of buyers.

These changes will allow reducing the first payments of the property price paid by the buyer as well as the interest rates on the mortgage loan, it is noteworthy that the real estate sector in China has been facing a severe crisis for a while, which led to many major real estate companies defaulting on fulfilling their obligations. The real estate crisis is currently threatening to push the Chinese economy as a whole into further decline.

The Shanghai, Shenzhen and Beijing stock exchanges also announced a reduction in the minimum guarantee ratio to finance the purchase of securities from 100 to 80 percent, to strengthen the Chinese securities market, the three exchanges said that this step, approved by the China Securities Regulatory Commission, will come into force after the close of trading on September 8, while the central bank said that moderately lowering the minimum guarantee ratio will help to use the available funds well.