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File photo shows an exterior view of the People's Bank of China in Beijing, capital of China. (Photo: Xinhua)

The People's Bank of China (PBC), the central bank, announced on Monday that it will initiate its outright open market reverse repo facility, with open market operations scheduled once a month and tenors of less than one year. The facility starts on Monday.

The move aims to "maintain reasonable abundance of liquidity in the banking system and further enrich the central bank's monetary policy toolbox," the central bank said in a statement seen on its website.

The new facility may include tenors of three and six months, and will strengthen cross-cyclical adjustments within a year so as to improve liquidity management in the open market, the China Securities Journal reported on Monday, citing people close to the central bank.

A repo is a form of short-term borrowing in money markets, involving the purchase of bonds with an agreement to sell them back on a specified future date.

With an outright reverse repo, the PBC gains greater flexibility in managing the bonds it purchases, according to the report from the China Securities Journal.

Pan Gongsheng, governor of the central bank, said at the Annual Conference of Financial Street Forum 2024 held in Beijing on October 18 that the central bank is considering a reduction of 0.25 to 0.5 percentage points in the reserve requirement ratio (RRR) at an appropriate time before the end of 2024, depending on market liquidity changes.