Central Banks
China Turns to Controversial Loan Tool for Policy Bank Funding
- PBOC net injected $15 billion of PSL into the lenders in Sept.
- Funds may drive credit to infrastructure, property: analyst
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China used a controversial tool to inject funds into policy banks for the first time in more than two years, as Beijing increasingly relies on the semi-official lenders to support the economy while monetary easing is constrained by rising global interest rates.
The People’s Bank of China added a net 108.2 billion yuan ($15.2 billion) in Pledged Supplemental Lending last month for China Development Bank, Agricultural Development Bank of China, and Export-Import Bank of China, according to a statement posted by the central bank over the weekend. That marked the first monthly increase in the tool since February 2020 and took the outstanding value of PSL to 2.65 trillion yuan.