PBC to deposit 50b yuan in commercial lenders

By Leo Zhang  |   2008-11-21  |     ONLINE EDITION

CHINA will deposit 50 billion yuan (US$7.3 billion) of government funds into commercial lenders this month in a bid to boost liquidity for lending and bolster returns of its treasury money.

The cash will be deposited at banks for six months from November 26 to May 26, 2009, the People's Bank of China said in a statement on its Website. The deposit interest rate will be fixed through an auction among commercial lenders, it said.

It will be the fifth time this year that China placed treasury cash in commercial lenders. Each of the previous four times, the central government placed 30 billion yuan of cash from the treasury with lenders for a three-month period.

China started to deposit treasury money with commercial lenders in 2006 as part of its efforts to shore up returns on the cash. It placed 20 billion yuan of treasury cash with lenders for three months in 2006 and deposited 30 billion yuan for six months in 2007.

The quickened pace to make more cash available at banks for lending comes at a time China is turning to expansionary fiscal and monetary polices to boost growth to counter a potential global economic recession.