PBOC issues its first bond swap program

Commercial banks facing shortfall in meeting risk buffer requirements

China's central bank launched its first swap program on Wednesday to transform 1.5 billion yuan ($223 million) of perpetual bonds into central bank bills, a measure to support recapitalization for commercial banks and cushion risks, according to an official statement.

The scheme was designed as Chinese commercial banks are facing a shortfall in complying with risk buffer requirements as the authorities are prone to proactively increase lending to small and private companies.