Economics
China Opens Taps to Policy Banks in Bid to Sharpen Stimulus
- Lending for policy banks now approved at start of each month
- Targeted stimulus channels money where policy makers want it
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China’s central bank is turning on the credit taps to its policy banks as it seeks to support the economy by channeling credit to designated areas of the government’s choosing.
The Pledged Supplementary Lending program used to fund its three policy banks for investment in areas such as shantytown development will now be allocated at the start of each month, the People’s Bank of China said late Tuesday. In the past, policy banks needed to seek roll overs from the central bank each month, imposing a form of lending restraint in case such funds weren’t forthcoming.