The central bank recently conducted 800 billion yuan outright reverse repurchase operations, with the net injection scale reaching 7.2 trillion yuan.

Everyday Reporter | Zhang Shoulin Everyday Editor | Wei Guanhong

On March 6, to maintain ample liquidity in the banking system, the People’s Bank of China conducted 800 billion yuan of fixed-term, rate-based, multi-price bid reverse repurchase operations, with a 3-month (91-day) maturity.

The reporter notes that so far, net injections from outright reverse repos have reached 7.2 trillion yuan, with pledged reverse repo balances at 277.6 billion yuan; by the end of February 2026, the Medium-term Lending Facility (MLF) balance reached 7.25 trillion yuan.

It is noteworthy that outright reverse repos were introduced in October 2024, less than two years ago, and since then, the scale has increased rapidly.

Outright Reverse Repos This Time Reduce Volume

Wang Qing, Chief Macro Analyst at Orient Securities, analyzed that in March, 1 trillion yuan of 3-month outright reverse repos mature. Therefore, the People’s Bank of China’s operation of 800 billion yuan of outright reverse repos on March 6 indicates a continuation of the same maturity, but with a reduced volume—200 billion yuan less than before. This is the first reduction in 3-month outright reverse repos since June 2025.

Wang Qing believes that the reduction in volume for this 3-month outright reverse repo mainly relates to the funding needs of banks and other financial institutions, and does not indicate a tightening of medium-term liquidity by the central bank. In March, 600 billion yuan of 6-month outright reverse repos will mature, and the central bank is likely to continue operations with increased volume. Additionally, 450 billion yuan of MLF will mature in March, and the central bank may also continue with increased or equal volume. Combining these two instruments, the central bank is expected to maintain net medium-term liquidity injections in March.

Regarding the main reasons behind this operation, Wang Qing pointed out that to ensure funding for key projects, the 2026 local government debt quota has been advanced. This means government bond issuance will remain high in March. Furthermore, the issuance of 500 billion yuan of new policy financial instruments in October 2025 has been completed, and the government announced in the March work report the issuance of 800 billion yuan of new policy financial instruments mainly to expand investment. These will lead to substantial loan issuance in March. All these factors will to some extent tighten liquidity. To address potential liquidity tightening, the central bank needs to inject medium-term liquidity into the banking system through outright reverse repos, guiding funds to remain relatively stable and ample. This supports government bond issuance, helps financial institutions maintain credit support to the real economy, and signals continued easing monetary policy through quantitative tools, indicating a moderate easing stance.

Considering that net medium-term liquidity injections in the first two months of the year reached 1 trillion yuan and 900 billion yuan respectively, which are relatively high, Wang Qing analyzed that the monthly net injections after the Spring Festival may decrease. Finally, whether the reduction in volume of the 3-month outright reverse repo on March 3 indicates an imminent reserve requirement ratio cut will depend on further observations of the entire month’s medium-term liquidity operations.

Since the Beginning of the Year, Net Long-term Funds from Open Market Tools Total About 2 Trillion Yuan

On March 6, People’s Bank of China Governor Pan Gongsheng disclosed at the Fourth Session of the 14th National People’s Congress that since the beginning of the year, net long-term funds from various open market tools have totaled about 2 trillion yuan.

Reviewing recent liquidity operations, the reporter notes that as of the end of January 2026, the total scale of structural monetary policy tools was about 5.5 trillion yuan, accounting for approximately 11% of the central bank’s total assets on its balance sheet.

In 2025, net liquidity injections from all open market operations totaled 6 trillion yuan, including 3.8 trillion yuan from outright reverse repos and a net purchase of 120 billion yuan of government bonds.

Regarding monetary policy operations in 2026, Pan Gongsheng stated that, in addition to traditional deposit reserve tools, the policy toolkit includes reverse repos, Medium-term Lending Facility (MLF), and government bond buy/sell operations. The central bank will use these short-, medium-, and long-term tools comprehensively to maintain ample market liquidity, aligning social financing and money supply growth with economic growth and inflation expectations.

On interest rates, the central bank will guide and regulate rates based on economic and financial conditions, promoting low overall financing costs. It will strengthen the implementation and supervision of interest rate policies, and regulate some market behaviors that could weaken monetary policy transmission. Banks will be required to clearly disclose the annualized comprehensive financing costs of loans and standardize intermediary fees.

Structurally, this year’s focus will be on supporting domestic demand, technological innovation, and small- and micro-enterprises. Financial institutions will be guided to assess risks scientifically, optimize credit structures, and implement targeted policies to curb unhealthy competition in certain industries, supporting economic restructuring and upgrading. The coordination of monetary and fiscal policies, including interest subsidies, guarantees, and risk-sharing, will be strengthened to amplify policy effects.

In the medium to long term, Pan Gongsheng said that the central bank will continue to enrich its policy toolkit, improve the short- and medium-term monetary injection mechanisms, and leverage the 7-day reverse repo rate as a policy rate to better guide short-term market rates. It will continue government bond buy/sell operations, improve the reserve requirement system, and focus on key areas with a balanced approach—appropriate, moderate, and flexible—to optimize the structural monetary policy framework.