China calls on major banks to set short-term interest ceiling

China has asked a group of banks operating at the state level to set a ceiling on interest rates on interbank operations.

The move is linked to a massive cash injection aimed at calming the markets after a sudden liquidity crunch last October.

The regulator last week asked at least two of these banks to set interest rates not exceeding 2.57% on negotiable certificates of deposit on their returns and maturity date, media said.

The website of the “National Center for interbank lending” showed that the basic interest rate on negotiable certificates of deposit, an indicator that measures the basic issuance rates of certificates of deposit in major commercial banks, came in line with that rate at about 2.57%.

This move highlights another attempt by the regulator to calm the financial markets by keeping the cost of financing stable and avoiding the risks of its fluctuations.

The central bank on Wednesday increased its monetary support by injecting 1.45 trillion yuan (200 billion dollars) of liquidity through the medium-term lending mechanism, the highest support provided by the central bank since 2016.