Financial institutions' funding demand declines, and the central bank continues to implement "massive" operations

People’s Finance News, April 8—500M yuan, 500M yuan, 1B yuan, 500M yuan—since April began, the 7-day reverse repo program has been carried out at a “very low volume” level for many days. Among them, the 500M yuan operation scale is the lowest since 2015. In addition, since March, buyout-style reverse repos have also repeatedly continued on with reduced volumes. These changes in short-term and mid-term liquidity management tools have drawn market attention to the central bank’s stance on liquidity regulation. Industry experts believe this is only a flexible adjustment made by the central bank in response to changes in market funding supply and demand, rather than a tightening of monetary policy. At present, market liquidity remains ample. In the view of industry experts, the central bank recently added the wording “fully met the needs of primary dealers” in its announcements for 7-day reverse repo operations, reflecting the main reason behind the “very low volume” operations: financial institutions’ demand for liquidity from the central bank has declined. The current amount of 7-day reverse repo operations is already sufficient to meet primary dealers’ short-term funding needs. (Shanghai Securities News)