China's Central Bank Launches Market-Boosting Swap Facility

China's central bank initiated operations under a swap facility to strengthen the stock market, exchanging assets worth 50 billion yuan. Implemented to increase market liquidity, the facility allows brokerages and insurers easier access to funding by swapping risk assets for liquid ones, alongside another funding scheme.

In an effort to bolster its ailing stock market, China's central bank conducted its inaugural operations on Monday through a swap facility, exchanging 50 billion yuan ($7 billion) in assets with key financial institutions.

In total, 20 institutions participated at a fee rate of 20 basis points, according to the People's Bank of China (PBOC). This initiative is part of broader efforts to recharge China's economy, struggling with a property sector crisis and subdued consumer activity.

The swap scheme, initially worth 500 billion yuan, enables brokerages, fund companies, and insurers to access funding by swapping risk assets for more liquid ones like treasury bonds. Concurrently, a second funding scheme encourages share buybacks among Chinese firms, valued initially at 500 billion yuan.

(With inputs from agencies.)