CITIC Securities: Further Clarification on the Details of the Central Bank's 'Securities Borrowing'

On July 5, Ming Ming, chief economist of CITIC Securities, said that the way for the central bank to carry out treasury bond borrowing operations and even subsequent sales of treasury bonds has been further clarified. The central bank’s use of credit borrowing means that the central bank will not provide collateral to banks that lend treasury bonds, which also means that the process of borrowing bonds will not achieve liquidity injection. In addition, the central bank has indicated that it will adopt an open-ended borrowing method, which means that the central bank’s control of the yield curve will not be limited to a certain maturity variety. Rather than preventing long-end yields from being too low, the central bank’s intention may be to completely control a sloping upward yield curve.