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BEIJING, March 29 (Xinhua) -- China's central bank on Wednesday skipped the open market operations of reverse repos, siphoning liquidity from the market. This was the fourth consecutive business day that the People's Bank of China (PBOC) has halted the open market operations of reverse repos, a process where it purchases securities from banks with an agreement to sell them back in the future. This meant that there was no injection of short-term funds into the banking system, which led to a net cash withdrawal, as previous reverse repos matured Wednesday and drained 70 billion yuan (10.16 billion U.S. dollars) from the market. The PBOC said in a statement that liquidity in the banking system was "at an appropriate level" as the government continued with its fiscal spending near the end of the month. Fiscal expenditures mean fiscal deposits flow into commercial banks from the central bank, thus improving market liquidity. However, the central bank's wording on Wednesday marked a change from previous comments on liquidity in the banking system as being "at a relatively high level" on March 24. China will pursue a "prudent and neutral" monetary policy in 2017, with the broad money supply (M2), a key measure for liquidity on market, projected to grow by around 12 percent, one percentage point lower than the 2016 target, according to the government work report, which was delivered at the annual parliamentary session earlier this month. A recent PBOC survey showed that about 20.3 percent of bankers polled said Chinese monetary policy was "relatively tight," up from only 5.7 percent in the fourth quarter of last year.|dfg|

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