Interbank liquidity has been............>

CHINA PRESS: Interbank liquidity has been excessively loose, as indicated by the

inversion of the yield on benchmark 1-year China Government Bond and the rate of

open market operations (OMO), Economic Information Daily reported. 

  - Although local bonds issuance and tax payments can partly drain liquidity,

after the PBOC has skipped OMOs for 15 days, the excess reserve ratio is likely

above 2%, the newspaper said, citing Haitong Securities. 

  - Large amounts of funds cannot flow into the real economy, as they are stuck

in the interbank market, the newspaper said, citing market participants. 

  - The PBOC may use repos and other monetary policy tools to drain some

liquidity to stabilise the market, said Citic Securities, according to the

newspaper.