China launches first central bank bills swap worth USD 222 mln
Updated 11:32, 20-Feb-2019
CGTN
["china"]
China starts to implement the first central bank bills swap (CBS) operation to support the issuance of perpetual bonds by commercial banks, China's central bank said on its website on Wednesday.
Starting from February 20, the first CBS operation is worth 1.5 billion RMB (around 200 million U.S. dollars), and lasts for a year with a rate of 0.25 percent, said the statement. 
The CBS scheme allows primary dealers to swap the perpetual bonds they hold for the central bank bills, effectively boosting market liquidity of perpetual bonds, according to Pan Gongsheng, deputy governor of the People's Bank of China (PBOC).
The tool is often used to replenish capital for commercial banks, so they have better financing capability to support the real economy, according to Pan. 
Pan clarified during a press conference on Tuesday that the CBS scheme is not the Chinese version of quantitative easing, and has a neutral impact on the liquidity in the banking system.
Perpetual bonds are fixed-income securities with no maturity date and are not redeemable but pay a steady stream of interests forever.
In January, the Bank of China issued the first-ever perpetual bonds by a Chinese bank, which were oversubscribed by investors including domestic insurance companies, securities firms and some foreign institutions.
Some other banks are actively preparing for the issuance of perpetual bonds to replenish capital, according to Pan.
(With input from Xinhua)