What is the significance of the central bank’s stimulus policy package combining monetary tools to support the capital market? It can broaden the upper limit of individual tool quotas to meet the needs of different institutions.

On May 7, at a press conference held by the State Council Information Office, leaders from the People's Bank of China (PBOC), the National Financial Regulatory Administration (NFRA), and the China Securities Regulatory Commission (CSRC) gathered to introduce the "package of financial policies to support market stability and stabilize expectations." PBOC Governor Pan Gongsheng announced at the meeting that two monetary policy tools supporting the capital market would be optimized. The quotas for the 500 billion yuan swap facility for securities, funds, and insurance companies and the 300 billion yuan re-lending facility for share buybacks and shareholding increases would be combined, bringing the total quota to 800 billion yuan.

In October 2024, to support the stable development of the capital market, the PBOC, in collaboration with relevant departments, introduced two monetary policy tools to support the capital market: the swap facility for securities, funds, and insurance companies, and the re-lending facility for share buybacks and shareholding increases. The initial quotas for these two tools were 500 billion yuan and 300 billion yuan, respectively.

Cailian Press reporters learned that, as of now, the swap facility has been operated twice, with a total amount of 105 billion yuan. Over 500 publicly listed firms have announced the use of loans to repurchase and increase their shareholdings, with the total loan amount approaching 300 billion yuan.

Market experts told Cailian Press reporters that the two tools adhere to the principles of marketization and rule of law, effectively enhancing the financing and investment capabilities of publicly listed firms and industry institutions. This is conducive to fulfilling these institutions' responsibilities in market value management and maintaining market stability. It also reflects the central bank's expansion and exploration of its role in safeguarding financial stability.

What is the significance of the PBOC's decision to combine the quotas of the two tools? The aforementioned market experts told Cailian Press reporters that by combining the quotas of the two tools, the PBOC can fully utilize existing policies while expanding the quota ceiling for individual tools. This enhances the convenience and flexibility of using the tools, better meeting the needs of different types of institutions.

Cailian Press reporters learned that the two tools have been widely welcomed by the market since their introduction, with a relatively ideal business scale and response speed. During the implementation of the policies, the People's Bank of China has summarized practical experiences, incorporated suggestions from various parties, and optimized the policy elements of the tools in terms of the scope of participating institutions, loan tenors, and the proportion of own funds.

The aforementioned experts predict that relevant departments will further optimize policy designs in the future based on the specific business development and market needs, better leveraging the role of the two tools in supporting the stable development of the capital market.