China's central bank on Thursday unveiled a new swap facility to bolster the growth of the country's capital markets, a strategic move which aims to ensure the steady development of China's financial landscape in the long term, according to industry experts.
People's Bank of China announced that it has decided to set up Securities, Funds and Insurance companies Swap Facility (SFISF), with the initial scale of 500 billion yuan (about 71 billion U.S. dollars).
The SFISF will allow eligible securities, funds and insurance companies to use their assets including bonds, stock ETFs and holdings in constituents of the CSI 300 Index as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills, said a statement.
Industry experts anticipate the newly-launched swap facility will inject significant additional funds into the capital market and reduce risks for non-bank entities amid market downturns.
"This greatly enhances the stock holding capacity of securities, funds, and insurance companies, and their ability to acquire funds. Especially when the market is undervalued, these non-bank entities can easily tap into market liquidity using this tool to strengthen their investments in quality assets so as to ensure market stability," said Xu Fei, an analyst of Wanlian Securities, a state-owned securities company.
Sources close to the central bank revealed that the swap facility has a maturity period of up to one year, with provisions for extension upon maturity.
Industry experts further noted the new monetary policy tool applies a "bonds-for-bonds" principle, which does not expand the scale of the base currency, and is not engaged in quantitative easing.
Furthermore, the swap facility enables non-bank entities to exchange less liquid assets for government bonds or central bank bills, making it easier for repurchase or financing sales in the market.
"The swap facility operates on a 'bonds-for-bonds' model, meaning the central bank does not directly inject funds, thereby avoiding an increase in base currency issuance and quantitative easing. While not involving base currency injections, experiences from the global financial crisis underscores the pivotal role of similar facilities, such as the Federal Reserve's Term Securities Lending Facility (TSLF), in swiftly stabilizing financial markets," said Wen Bin, chief economist at Minsheng Bank.
Starting Thursday, applications from eligible securities, funds and insurance companies will be accepted.
China's new 500 billion yuan swap facility to bolster capital market: experts
A Chinese envoy on Wednesday slammed the United States for vetoing a UN Security Council draft resolution that calls for an immediate ceasefire in Gaza, saying the move has shattered the Gazan people's hope for survival and pushed them further into darkness and desperation.
The draft, put forward by the Council's 10 non-permanent members, demands an immediate, unconditional and permanent ceasefire, as well as the immediate and unconditional release of all hostages.
The 15-member Council voted 14-1 in favor of the resolution, but the United States used its veto as a permanent member of the Council to block it.
Fu Cong, China's permanent representative to the United Nations, said China is very disappointed with the result of Wednesday's vote.
Guyana, Algeria, and other E10 members (elected non-permanent members of the Security Council) demonstrated maximum sincerity and constructiveness during the consultation on the draft resolution, he said.
"In the future, when looking back, people will find it hard to understand this part of history. The Security Council is mandated under the UN charter to shoulder the primary responsibility for maintaining international peace and security. It is incomprehensible that for the past year or so, the United States has been so insistent in rendering the Council incapable of playing its role, leading to its paralysis. The U.S. has claimed to be conducting parallel diplomatic efforts and has repeatedly promised that progress would be made soon in the negotiations. It is incomprehensible that to date, the so-called diplomatic negotiations have been going in circles. Why is Israel allowed to continue its military operations while constantly putting forth new conditions for negotiations?" Fu said.
Fu said Israel has flagrantly breached every red line of international humanitarian law, with its actions causing an unprecedented humanitarian disaster.
But even as a famine is about to break out in Gaza, the United States always seems to be able to find justification to defend Israel, which represents a distortion and selective disregard of the application of international humanitarian law, the ambassador said.
People never knew before how low one could stoop in terms of double standard. No wonder people feel angry. Their indignation also stems from the fact that the continued supply of weapons from the U.S. has become a decisive factor for the war lasting so long, causing so many casualties and so much destruction, he said.
"Facts have shown that Israel's military operations in Gaza have long exceeded the scope of rescuing hostages. Insistence on setting preconditions for a ceasefire is tantamount to giving the green light to prolong the war and condone the continued killing. The repeated use of veto by the United States has reduced the authority of the Security Council and international law to an all-time low," Fu said.
China called on the U.S. to take its responsibilities as a permanent member of the Council seriously, stop being passive and evasive, and stop the deliberate procrastination. Instead, it should act with a sense of responsibility to history, and support the Council in taking all necessary actions to achieve an immediate ceasefire, save lives, and restore peace, the envoy said.
The United States has repeatedly obstructed the Security Council from passing draft resolutions on a ceasefire in Gaza since a new round of Israel-Hamas conflict broke out on October 7, 2023, which has killed nearly 44,000 Palestinians over the past 13 months.
US shatters Gazan people's hope for survival: Chinese envoy
