According to reports, the People's Bank of
It is the first time since June that the central bank is using forward repos to drain liquidity from the markets. It also comes after
Traders said the central bank typically gauges demand from banks the day before conducting open-market operations. But on this occasion the norm was bypassed and the repos issued without advance warning.
A trader at a Chinese commercial bank in
"If money market conditions remain sloppy, the central bank could even step up efforts to mop up excess," he said.
Shadow banking has been identified as a major risk to
Chinese banks traditionally see a spurt in lending at the beginning of the year, as businesses and consumers borrow money to fund spending in the new year.
The drain comes in the wake of a jump in bank and shadow bank lending in January. New local-currency loans reached reminbi 1.32 trillion last month which was nearly triple December's total of 200 billion - more than market expectations and the highest monthly total since
In January, new local currency loans nearly tripled from the month before to
By reducing the amount of money available, the government makes it harder for banks to borrow and move the money into risky investments, writes
However, in its attempt to rein in credit,
This caused a sell-off in global markets last year, spurring
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