PBOC's Pan said the central bank, together with the Financial Regulatory
Administration and the CSRC, will establish a liquidity-support tool to address
large redemptions at non-bank institutions. The measure is intended as a
bond-market stabilization mechanism and a new PBOC macroprudential instrument.
It will be activated in scenarios of collective liquidity stress at asset
managers and a redemption-to-sale negative loop in the bond market. Operations
will require meeting macroprudential conditions and provision of high-grade
collateral to avoid pricing distortion and a perceived blanket backstop, and to
preserve market discipline. Eligible entities include bank wealth-management
subsidiaries, public fund managers, and their parent banks or securities firms.
