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What is a reverse repurchase?

What is a reverse repurchase?

In order to maintain the epidemic prevention and control of the special period of the banking system liquidity reasonable and abundant, the currency market can run smoothly, China's central bank carry out open market reverse repurchase operations and injected 100 billion yuan into the market. liquidity in the banking system as a whole than the same period last year more than 900 billion yuan.

What is a reverse repurchase?

Generally speaking, central bank reverse repurchase is an operation in which the central bank injects money into the market to provide liquidity, while a repurchase is an operation in which the central bank withdraws money from financial institutions to reduce liquidity.

Overall, central bank made three strategic considerations with this operation:

1. Solve the urgent need of the stock market;

2. Ease market liquidity. To help many small and medium-sized enterprises (smes) such as  tourism, accommodation and logistics to tide over the crisis, so that their cash flow and capital chain can be transferred;

3. Pacify the housing market. After the outbreak, The national economy can continue to grow,  realize stable growth and stable employment.

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