For the People’s Bank of China (PBOC) “the single most important source of liquidity is gone”

Via Bloomberg:

• As it moves towards a more market-driven economy, China has stopped regular foreign-currency purchases and is freeing up restrictions on the flow of money in and out of the country
• Its long accumulation of foreign-exchange reserves may be at an end
• China’s stockpile of Forex reserves, the world’s largest since 2006, will be $3.5 trillion to $4 trillion or lower at the end of 2015, according to 12 of 18 economists in a Bloomberg survey

Xi Junyang, a finance professor at Shanghai University of Finance and Economics:

• “For China’s central bank, it means the single most important source of liquidity is gone”
• “It means the central bank has to find other sources to inject liquidity — it has to cut the required reserves, it has to create more open-market tools”