China’s central bank has launched a swap facility to provide liquidity directly to nonbank financial institutions facing heavy redemptions during periods of bond-market stress.
The Bond Market NBFI Swap Facility (BNSF) adds to the People’s Bank of China’s macroprudential toolkit. It is designed to bypass commercial banks that may be reluctant to lend during market turmoil and curb cycles of forced selling that could pose systemic risks.
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