MNI POLICY:PBOC Plans Cash Injection To Calm Virus-Hit Markets

     BEIJING (MNI) - The People's Bank of China will take measures to provide

ample and cheap capital when financial markets open on Feb. 3, including the

provision of CNY300 billion of low-cost refinancing funds to major nationwide

and local banks affected by the coronavirus outbreak, Deputy Governor Pan

Gongsheng said in an interview with the bank's newspaper Financial News on

Saturday.

     Pan spoke before the central bank said on Sunday it would inject CNY1.2

trillion on Monday through reverse repo operations and that overall market

liquidity is CNY900 billion higher than at the same time last year. The net

injection will total CNY150 billion, according to MNI calculations.

     Here are other key points from the PBOC statement and Pan's interview:

     - The central bank will provide liquidity through tools such as open market

operations, standing lending facilities, refinancing and rediscounting, in order

to keep money market rates stable. It will relax January reserve requirements

for affected banks.

     - The PBOC will provide CNY300 billion in cheap refinancing funds to

financial institutions. Banks receiving the funds will be required to lend to

producers of medical and other key goods at preferential rates.

     - The central bank will enhance countercyclical policy, "appropriately" cut

loan rates and provide medium- and long-term financing to help businesses

weather the epidemic.

     - Companies struggling to repay loans due to the outbreak will be allowed

extensions or renewals.

     - Banks must not withhold loans to small and micro enterprises in affected

sectors such as wholesale, retail, accommodation and catering, logistics and

transportation, or culture and tourism.

     - The PBOC will closely monitor market liquidity, provide information of

planned measures in a timely manner and reinforce policy guidance.

     - Overseas borrowing overseas can be lifted for companies involved in

combatting the disease outbreak.

     - Individuals' normal demand for foreign exchange will be protected, while

personal FX transactions should be conducted through online banking.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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