PBOC extends credit to China policy banks in bid to sharpen stimulus

As Bloomberg reports, China’s central bank is turning on the credit taps to its policy banks as it seeks to support the economy by channelling credit to designated areas of the government’s choosing.

The Pledged Supplementary Lending program used to fund its three policy banks for investment in areas such as shantytown development will now be allocated at the start of each month, the People’s Bank of China.

The move helps local governments tasked with urban redevelopment projects to refinance high debt loads, while avoiding a broad cash infusion to the entire economy that may inflate asset bubbles in equities or the apartment markets of Shanghai and Shenzhen.