PBOC steps up implementation of two capital market policy tools

The central bank aims to maintain the stable operation of financial markets, including stocks, bonds and foreign exchange, by fully utilizing the swap facility for non-bank institutions in the bond market.

In October 2024, the PBOC created two tools to support the capital market: the Securities, Funds and Insurance companies Swap Facility (SFISF) and the Central Bank Lending Facility for Share Buybacks and Shareholding Increases. Earlier this month, the PBOC and other authorities further optimized the policy elements and implementation rules for these two tools, encouraging financial institutions to fully utilize them.

According to the report, the central bank will leverage the combined effects of existing and incremental policies, step up counter-cyclical adjustments, and expand domestic demand to promote high-quality and sustained economic development.

Furthermore, it will continue to implement a moderately loose monetary policy, enhancing its forward-looking, flexible and targeted nature. The PBOC will also increase support for key areas such as the "five major financial articles" (technology finance, green finance, inclusive finance, pension finance and digital finance) and the construction of the "six networks" (water networks, new-type power grids, computing power networks, next-generation communication networks, urban underground pipe networks and logistics networks).

Edited by Mason Ren, rengenyu@mysteel.com