The Chinese central bank has unveiled plans to infuse RMB1.2 trillion ($173bn) to ensure banks’ in the country don’t fall short of liquidity when the country is fighting against the deadly coronavirus outbreak.
The People’s Bank of China (PBOC) will pump the funds through open market operations.
PBOC in a statement said: “To maintain reasonable and adequate liquidity in the banking system and sound operation of the money market during the period of epidemic prevention and control, the People’s Bank of China will conduct reverse repo operations in the amount of RMB1.2 trillion on February 3, 2020 to ensure ample liquidity supply.
“The liquidity in the whole banking system is RMB900 billion more than that of the same period of last year.”
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World Health Organization (WHO) has declared the coronavirus outbreak a public health emergency of international concern (PHEIC).
The outbreak could drag down Q1 GDP growth in China by around one percentage point, Caijing magazine quoted government economist Zhang Ming as saying.
According to Ming, GDP growth in Q1 2020 could be 5% or less.
The Chinese city of Wuhan is the epicentre of the novel coronavirus, which has led to the deaths of 362 people as per data gathered till 2 February.
A total of 17,386 coronavirus cases have been confirmed globally. The first death outside China due to the outbreak was reported in the Philippines.
Banks to trim branch network amidst coronavirus outbreak
In response to the outbreak, major banking groups including Goldman Sachs, UBS, and Credit Suisse have asked their bank workers in Hong Kong to work from home after returning from China.
Last week, banks operating in Hong Kong, including HSBC, said that they will close 20-30% of their branches or cut down service hours temporarily in the wake of the outbreak.