Central bank injects funds into market in December

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BEIJING - China's central bank pumped more money into the interbank market last month to meet rising liquidity demand during the end of the year.

The People's Bank of China (PBOC) said Tuesday it granted 134 billion yuan ($20 billion) to banks and other financial institutions through the standing lending facility (SLF), with terms from overnight to one month.

The amount was much higher than the 24.2 billion yuan in November.

The measure was effective. The average overnight Shanghai Interbank Offered Rate in December stood at 2.67 percent, down from 2.73 percent the previous month.

SLF was created by the PBOC in early 2013 to provide provisional liquidity support for the banking system.

Another 476 billion yuan was added in December via the medium-term lending facility, a tool introduced in 2014, and 65.9 billion yuan was lent to three policy banks including the China Development Bank.

The central bank increasingly relies on such open-market operations to maintain stable liquidity, rather than cuts in interest rates or reserve requirement ratios.

China has decided to maintain a prudent and neutral monetary policy in 2018.

"The floodgates of monetary supply should be controlled, and credit and social financing should see reasonable growth," said a statement released after the Central Economic Work Conference.