(Avaneesh Pandey – International Business Times)
China’s central bank – the People’s Bank of China (PBOC) – is planning to launch its own version of quantitative easing, the Wall Street Journal reported Tuesday, citing officials familiar with the matter. Under the new plan, reportedly named “pledged supplementary lending,” Chinese banks would be allowed to swap local-government bailout bonds for cash – boosting liquidity and growth in an economy that recently experienced its weakest first-quarter growth since 2009.
The new tool, similar to the European Central Bank’s Long-Term Refinancing Operation (LTRO), is a loan given by the PBOC to commercial banks at below-market interest rates. The new strategy would seek to address these issues by allowing banks to use local-government bonds as collateral to take out low-interest loans from the PBOC, the Journal reported. Click here to read more.