SHANGHAI: China's central bank issued 183.8 billion yuan ($29.99 billion)worth of three-year bills in July, according to central bank data, showing that while the bank was publicly injecting short-term funds, it quietly mopped up excess liquidity to maintain rate stability.
Data from the People's Bank of China (PBOC) quarterly monetary policy report published on Friday evening showed the bank, facing a maturing issue of the same amount and same tenor, turned and reissued similar amounts of fresh bills to keep the cash out of the system.
Chinese regulators are worried that the financial sector has been using excess funds to invest in speculative ventures and bail out firms better left to go bankrupt, making it difficult to address entrenched industrial overcapacity.
The PBOC injected a net 342 billion yuan into China's money market in July, following a drastic credit crunch that occurred in late June that saw short term rates rise as high as 30 percent, setting off a domestic market panic and rattling overseas observers.
However, rates remained relatively high in July despite the injections, with some overextended smaller banks and rural credit cooperatives issuing panicked high quotes to stay liquid.
The three-year bills were issued in two separate tranches on July 16 and July 30, at interest rates of 3.37 percent and 3.5 percent, respectively.
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