CHINA: State Council of PRC to Launch China’s First Monetary Policy Tool

Friday October 11 2024

On 10^th October 2024, the State Council of the People’s Republic of China announced that China’s Central Bank has decided to set up Securities, Funds and Insurance companies Swap Facility (SFISF), with the initial scale of 500 billion yuan (about 71 billion U.S. dollars) for “the healthy and stable development of the capital market.”

The SFISF, which is the first monetary policy tool created by China to support the capital market, will allow eligible securities, funds and insurance companies to use their assets including bonds, stock ETFs and holdings in constituents of the CSI 300 Index as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills.

The scale of the SFISF could be expanded depending on the development of the situation, according to the central bank.

The new tool can also boost the participation of non-bank institutions, improve the transmission efficiency of monetary policy in the capital market, and contribute to the balanced development of bond, stock and other markets.

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