The People’s Bank of China (PBC), the central bank of the country, has signed an agreement with the Bank for International Settlements to create a Renminbi Liquidity Arrangement (RMBLA).

The new arrangement is aimed at providing liquidity support to participating central banks through a reserve pooling scheme during volatile market conditions.

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Initially, a group of central banks in Asia and the Pacific are participating in the liquidity arrangement.

Other than the People’s Bank of China (PBC), participating members include Bank Indonesia, Central Bank of Malaysia, the Hong Kong Monetary Authority, the Monetary Authority of Singapore and the Central Bank of Chile.

The collaboration will see each participating back contribute a minimum of RMB15bn or US dollar equivalent, to create a reserve pool.

“The reserve pooling provides additional features as participating central banks would not only be able to draw down on their contributions, but would also gain access to additional funding through a collateralised liquidity window operated by the BIS up to an amount equivalent to the central bank’s share of the collateralised liquidity window,” the BIS said in a statement.

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In a separate development, the PBC made the biggest daily cash injection in three months into the banking system.

According to Reuter’s report, the central bank injected around $14.95bn (CNY100bn) worth of seven-day reverse repos.

The move was aimed at keeping the ‘half year-end liquidity stable,’ the news agency said citing an online statement.

In April media reports said that the PBC will cut banks’ reserve requirements to deal with ailing economy.