At present, the liquidity of banking system management not only faces the interference of capital flow, financial expenditure and IPO changes in the capital market, but also undertakes the task of perfecting the price-based regulatory framework and guiding the market interest rate level.
In order to maintain the overall stability and moderation of liquidity in the banking system and support the reasonable growth of money and credit, the central bank needs to continuously enrich and improve the tool portfolio according to the term, subject and purpose of liquidity demand, and further improve the flexibility, pertinence and effectiveness of regulation. In September 2004, the People's Bank of China set up a medium-term loan facility.
Extended data:
Market interpretation
Medium-term loan facilitation MLF is a new measure, which confirms the market's speculation on medium-term credit financing tools.
Compared with the Standing Loan Facility (SLF), the difference is not obvious, but the medium-term liquidity management tool can stabilize everyone's expectations. Creating medium-term lending facilities can not only meet the current requirements of the central bank to stabilize interest rates, but also not directly put the base currency into the market. This is a satisfactory solution.
The medium-term lending facility reflects the adjustment of the basic principles of China's monetary policy, namely, maintaining pressure, directional regulation, structural adjustment, pre-adjustment and fine-tuning.
Baidu Encyclopedia -—MLF Operation