Central Bank of China Pours $101 Billion into Banking System via MFL

The rate for one-year loans was not changed

People’s Bank of China injects the country’s banking system with liquidity via medium-term lending facility (MFL) with no changes in the rate of one-year loans.

According to Interfax citing the bank’s press release, the regulator provided the country’s banking system with 700 billion yuan ($101 billion).

The rate for one-year loans has been the same for four months in a row (2.95%). The last time the central bank changed the rate was in April when the rate was decreased from 3.15% to 2.95%. The current level of the rate is the lowest since the beginning of the medium-term lending facility program in September of 2014.

MLF is a very important credit tool that the People’s Bank of China uses to provide commercial banks with liquidity. It also has a direct impact on loan prime rate (LPR), which became a benchmark in 2019.

For the first time, the medium-term lending facility was launched in China in 2014 to guarantee banks with liquidity. As a result, Chinese banks can get money from the central bank on the pledge of securities.

Read also