The central bank launches 800 billion yuan buyout reverse repurchase program

1、 Core operational details: Clarify tool attributes and precisely regulate liquidity

The core positioning of the 800 billion yuan buyout reverse repurchase launched by the central bank this time is to supplement the medium-term liquidity of the banking system. The operational details are clear and in line with current market demand, demonstrating the flexibility and precision of monetary policy regulation. As a new monetary policy tool launched by the central bank in October 2024, the core difference between buyout style reverse repurchase and traditional pledge style reverse repurchase lies in the transfer of bond ownership - during the operation period, bond ownership will be transferred to the central bank, and the central bank can dispose of the bonds during the repurchase period, which not only enhances the liquidity of secondary market bonds, but also better protects the rights and interests of funding providers.

From the perspective of operation mode, the mode of "fixed quantity, interest rate bidding, multi price winning" is adopted this time. This mode can reduce the "free riding" behavior in interest rate bidding, and allow participating institutions to make independent quotations according to their own capital costs. The bid winning interest rate is their own quotation, which can more truly reflect the market capital supply and demand. The 3-month (91 day) term design fills the gap in the previous monetary policy toolbox for short-term liquidity injection tools within 1-12 months, enhances the central bank's ability to adjust liquidity across periods within one year, and further improves the refinement level of liquidity management.

2、 Operation background: Balancing liquidity and responding to policy regulation guidance

The implementation of the 800 billion yuan buyout reverse repurchase operation is not a blind injection of liquidity, but a precise decision made by the central bank based on the current market liquidity situation, the size of maturing funds, and policy guidance. It is reported that in March, there was a 1 trillion yuan 3-month buyout reverse repurchase due. This 800 billion yuan operation is a scaled down continuation, with a scale of 200 billion yuan. This is also the first scaled down continuation of this term buyout reverse repurchase since June 2025.

Behind the continued reduction in volume is the stable trend of current market liquidity: on the one hand, the cash withdrawn by residents in advance after the Spring Festival has been gradually deposited back into banks, increasing the available funds for banks; On the other hand, March, as the end of the season, saw a significant increase in fiscal expenditure, and the pace of local government bond issuance slowed down during the Two Sessions, reducing the consumption of bank funds. At the same time, since 2026, the central bank has net injected about 2 trillion yuan of medium and long-term funds through tools such as buyout reverse repurchase and medium-term lending facility (MLF), and the overall liquidity is at a reasonable and sufficient level, without the need to significantly expand the scale of investment, reflecting the regulatory approach of "stability first".

In addition, this operation also echoes the requirements of "continuing to implement moderately loose monetary policy" and "maintaining sufficient liquidity" in the 2026 government work report, providing strong support for the issuance of government bonds, the landing of new policy financial instruments, and the injection of real economy credit in March, and responding to potential liquidity tightening pressure.