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China central bank presses banks to help with funds after interbank lending freezes: Caixin

Published 12/15/2016, 09:03 PM
Updated 12/15/2016, 09:10 PM
© Reuters. People walk past PBOC headquarters in Beijing

© Reuters. People walk past PBOC headquarters in Beijing

SHANGHAI (Reuters) - China's central bank stepped in to urge major commercial banks to lend to non-bank financial institutions on Thursday afternoon after many suspended interbank operations amid tight liquidity conditions, Caixin reported on late on Thursday.

The People's Bank of China intervened to help institutions such as securities firms and fund managers after banks, including the big four state-owned banks, became reluctant to make loans, the financial magazine said, citing traders and institutional sources.

Caixin said that traders pointed to worsening sentiment among banks about market conditions and growing caution over interbank lending, especially after the U.S. Federal Reserve triggered a sell-off in the bond futures market on Thursday by signaling more rate hikes in 2017.

© Reuters. People walk past PBOC headquarters in Beijing

Liquidity has become a major factor affecting the market after the central bank increased the cost of capital through open market operations in the past month, the magazine added.

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