People's Bank of China

The People's Bank of China is addressing excess liquidity pushing money market rates to multi-year lows, with overnight repo near 1.2 percent and one-month certificate yields at January 2023 levels. Despite recent 9.5 billion yuan injections via seven-day reverse repos, the PBOC maintains tools to drain funds including medium-term lending facility reductions and central bank bill issuances. China faces excess liquidity estimated at 50 percent above cross-country benchmarks, leading to credit misallocation at provincial level. The central bank cut foreign exchange risk reserve ratios from 20 percent to zero, lowering hedging costs as the yuan strengthens on trade surplus settlements and easing US-China tensions.