PBOC to Create Equity Finance Tool, Expand Bond Financing Tool

(Bloomberg) -- The People’s Bank of China will expand the bond financing tool it announced last month and is pushing financial institutions to set up a similar tool for equities, the bank’s governor told a government-affiliated newspaper.

  • The central bank is studying the possibility of offering initial capital to the equity tool, which would support private firms with funding difficulties, Governor Yi Gang said in an interview with the Economic Daily.
  • The tool would actually be set up by qualified financial institutions, such as private funds, securities companies and the investment divisions of commercial banks.
  • There were no amounts mentioned in the interview, or details on how equity financing would work
  • The central bank and the securities regulator are drafting a plan to support bonds of private companies
  • Aggregate liquidity is "adequate," but the problem remains in how to guide the funds to private firms and the sector most in need