A pedestrian passes the headquarters of the People's Bank of China in Beijing. (ZHANG GANG / FOR CHINA DAILY)

BEIJING - China's central bank on Monday pumped cash into the banking system via reverse repos to maintain liquidity.

China will pursue a prudent monetary policy in a more flexible and appropriate way, according to this year's government work report

The People's Bank of China (PBOC) injected a total of 120 billion yuan (about US$16.93 billion) into the market, including 40 billion yuan through seven-day reverse repos at an interest rate of 2.2 percent and 80 billion yuan of 14-day contract at an interest rate of 2.35 percent, according to a statement on the website of the central bank.

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The move is intended to maintain stable liquidity in the banking system, the central bank said.

With no reverse repos maturing Monday, this led to a net injection of 120 billion yuan.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

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China will pursue a prudent monetary policy in a more flexible and appropriate way, according to this year's government work report.

The country will use a variety of tools including required reserve ratio reductions, interest rate cuts, and re-lending to enable M2 money supply and aggregate financing to grow at notably higher rates than last year, said the report. 

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