China's central bank reins in excessive liquidity

China's central bank has announced that it has issued bills of 160 billion yuan (about 20.51 billion U.S. dollars) to some 20 financial institutions to rein in the excessive liquidity.

The interest rate for the bills is 2.7961 percent.

Experts say the effect of this move equals to raising banks' deposit reserve rate by 0.5 percentage points.

So far this year, the central bank has issued bills for four times with a combined value of 410 billion yuan. In the meantime, it has raised deposit reserve rate by 1.5 percentage points in three times, freezing about 450 billion yuan.

Buyers of the bills include the country's three policy banks, five major state-owned commercial banks and more than 10 national commercial banks.

Experts have generally held that too much liquidity on the market is the major reason behind the country's soaring housing prices and inundant speculative activities in the securities and futures markets and some other sectors.

Source: Xinhua