China kicks off 500 bln yuan swap facility to aid stock market. China’s central bank said on Thursday it would start accepting applications from financial institutions to join a newly created funding scheme, initially worth 500 billion yuan ($70.62 billion), to aid the capital market.
The People’s Bank of China (PBOC) said eligible securities firms, fund companies and insurers can apply to join the swap scheme, which gives them easier access to funding to buy stocks.
“The swap facility is designed to provide liquidity support to non-bank financial institutions, and can help lift confidence in the stock market” ; said Ming Ming, analyst at Citic Securities.
The PBOC first announced the scheme on Sept. 24 as part of a broad package of policies to stimulate the economy and boost capital markets.
Clarification: The term “swap” refers to the exchange of one asset or liability for another similar asset or liability by increasing or decreasing risks.
