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After China's contractor bank was taken over due to serious credit risk, in order to prevent the impact of the incident on the liquidity of small and medium-sized banks, the open market of the People's Bank of China increased its counter-repurchase operation every day this week, and today's net investment unexpectedly increased to more than four new highs. So far this week, the net investment scale has reached 400 billion yuan, and the whole week's net investment scale is expected to be the highest since January 12-18 this year.
Market participants believe that the central bank's continuous operation is intended to hedge the pressure on small and medium-sized institutions caused by the contractor bank incident, thus stabilizing market sentiment without excessive pessimism; however, in the long run, the impact of market trust caused by the incident will be difficult to recover in the short term, and the liquidity situation of small and medium-sized banks in the future is still facing a test. Regulators still need to dredge the channel of liquidity transmission to avoid negative factors fermentation.
"To release OMO (open market operation) for several consecutive days is, of course, to hedge the adverse effects of contractor banks (events)." Tan Songheng, senior researcher of Sanxiang Bank, said.
He also explained that the case of the contractor bank led people to believe that inter-bank repurchase is point-to-point, lacking the guarantee of the central clearing house, and the risk is very high. So yesterday, we can see that the exchange is very loose and it is difficult for banks to borrow money. This is a structural tension. Its essence is that the credit between banks is damaged. Home only dare to go to the exchange, a place guaranteed by the central clearing house, to deposit money.
"So, there are two purposes for money lending: to ease the tension in the inter-bank market and to make a gesture." He added.
The open market of the People's Bank of China today carried out a seven-day counter-repurchase operation of 270 billion yuan, according to which a net investment of 250 billion yuan will be made in the open market on a single day. Today, both the operation volume and the net one-day delivery scale are the highest since January 17.

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