Key facts
- China has launched a repurchase agreement facility to supply yuan liquidity to foreign monetary authorities, international financial organizations, and sovereign wealth funds.
- The facility aims to boost the Chinese yuan's global appeal and availability.
- It offers maturities of up to three months against high-grade collateral, including Chinese sovereign and policy bank bonds.
- Rates are linked to the PBOC's seven-day reverse-repo rate.
China's central bank has launched a new repurchase agreement facility to supply yuan liquidity to foreign monetary authorities, international financial organizations, and sovereign wealth funds. This initiative aims to enhance the global appeal and availability of the Chinese yuan. The facility provides maturities of up to three months, accepting high-grade collateral such as Chinese sovereign and policy bank bonds. The pricing mechanism links the offshore tool to the domestic policy rate by adding a spread to the PBOC's seven-day reverse-repo rate.