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China central bank expands accepted collateral for medium-term lending facility

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China central bank expands accepted collateral for medium-term lending facility

The People's Bank of China added more types of securities as accepted collateral for its medium-term lending facility, or MLF, including green loans and corporate bonds issued by small enterprises, China News Service reported, citing a June 1 statement from the central bank.

The Chinese central bank will also accept green bonds rated AA and above as collateral.

The move is aimed at supporting small enterprises and green economy industries, the report said. Authorities introduced the MLF tool in 2014, which allows commercial and policy banks to borrow from the central bank using securities as collateral.

The central bank previously accepted treasury bonds, central bank bills, local government bonds and corporate credit debt rated at AAA, among others, as collateral for MLF operations.

The People'a Bank of China reiterated that it will continue with prudent and neutral monetary policy and maintain a stable level of liquidity.