New policy tool avoids holiday cash shortage

Central bank governor reiterates that prudent monetary stance will remain

Chinese central bank has innovated another policy tool to avoid a temporary cash shortage during the upcoming national holiday, while bearing in mind that too much money supply is the origin of asset bubbles that threaten financial stability.

The People's Bank of China, the central bank, introduced a new measure, the first in the world, called the "Temporary Reserve Utilization Facility", on Friday to unfreeze more cash for commercial banks during the seven-day Spring Festival holiday starting from Feb 16.