China’s Central Bank Launches Swap Facility to Boost Capital Market Development

China's central bank announced Thursday that it has decided to set up Securities, Funds and Insurance companies Swap Facility (SFISF), with the initial scale of 500 billion yuan (about 71 billion US dollars) for the healthy and stable development of the capital market. China's News Agency (Xinhua) quoted the People's Bank of China as saying in a statement that the SFISF will allow eligible securities, funds and insurance companies to use their assets including bonds, stock ETFs and holdings in constituents of the CSI 300 Index as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills. The scale of the SFISF could be expanded depending on the development of the situation, according to the central bank. China's central bank also conducted 150 billion yuan (about 21.2 billion US dollars) of seven-day reverse repos at an interest rate of 1.5 percent Thursday. The move aims to keep liquidity in the banking system reasonable and ample, the central bank said. A reverse rep o 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. Source: Qatar News Agency