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Overnight, the People's Bank of China, China's Central Bank, announced on Weibo, China's equivalent of Twitter, that it had recently conducted short-term liquidity operations to qualified financial institutions.

This was the second big emergency injection of cash the PBOC has had to do this year, with the last major injection coming back in June.

According to Bloomberg, the seven-day repurchase rate, a gauge of funding availability in the banking system, jumped 140 basis points to 6.6%. Although according to the Financial Times, the rate jumped near the record it hit in June of 10%.

Either way, the interbank lending rates spiked and there was a cash crunch as banks hoarded cash.

The amount of the emergency injection wasn't released but Bloomberg reported that sources said it was $32.9 billion.

Several key things stick out from this event:

1. That the PBOC didn't waste any time in announcing this emergency measure, when, in the past, it has waited, sometimes weeks, to "reveal" that it has injected liquidity into the system.

2. That the PBOC took to Weibo to announce it. (!)

The PBOC clearly wanted to calm the markets and wanted to make sure that the interbank lending rates didn't get too high, as they did in June.

Emergency injections into a banking system brings back memories from the days after the Lehman collapse.

Are these big injections of cash into China's largest banks a sign that China is in the midst of a credit crisis?

And why aren't the global markets paying attention to it?


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