China's central bank sets up non-bank financial institution bond market swap facility
FXI•China's central bank said it set up the Bond Market NBFI Swap Facility to maintain bond market stability. It will let certain wealth management subsidiaries and public fund managers borrow central bank bills to raise financing during collective liquidity risks or systemic bond market stress.
1. Facility details
The facility will support certain bank wealth management subsidiaries and public fund managers, as well as their parent firms, in borrowing central bank bills when asset managers face collective liquidity risk or the bond market is under systemic stress. They can use the cash to buy eligible bonds or units from their own mutual fund products facing redemptions, then pledge those assets to the central bank.
