PBoC: new liquidity tool is not ‘Chinese version of QE’

Growth-boosting measure equates to three-year easing, says one analyst

pboc building
The People's Bank of China: new central bank bills swap tool

The People’s Bank of China has created a new tool called the central bank bills swap (CBS) to beef up liquidity of the perpetual bonds issued by Chinese state banks. Some analysts say it amounts to quantitative easing (QE), which the central bank denies.

The measure could inject more liquidity into the banking system, economists say, although the PBoC claims the impact would be “neutral”.

“This is, of course, a form of QE, even if the PBoC does not confirm it,” says Alicia Garcia-Herrero

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