The Wall Street Journal reports that the People’s Bank of China is considering following Europe's example to free up more credit:
The PBOC is considering providing banks loans in return for taking local government bonds as collateral
That would be a program similar to Europe's long-term refinancing operations (LTROs)
The Journal cites 'people familiar with' the PBOC talks
- The proposed strategy would allow Chinese banks to swap local-government bailout bonds for cash as a way to bolster liquidity and boost lending
- Adopting the strategy would mark a major shift in the central bank's money-supply policy and underscore the leadership's deep concern about missing already lowered growth expectations.
More at the (gated) article: China Central Bank Checks Europe Playbook on Credit
