China's central bank adds liquidity via operations

China's central bank on Monday added liquidity to the banking system through reserve requirement ratio (RRR) cut and reverse repos.

The People's Bank of China lowered RRR for financial institutions by 0.25 percentage points, unleashing 530 billion yuan (US$81.65 billion) of long-term capital into the market.

The move aims to support the development of the real economy and reduce comprehensive financing costs, according to the central bank.

The central bank also conducted seven-day reverse repos worth 10 billion yuan at an interest rate of 2.1 percent.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.