China's central bank lent 500 billion yuan, totaling $81.35 billion, to the five main Chinese state-controlled banks in what appears to be an attempt to stimulate the Chinese economy, the New York Times reported Wednesday.
Each state-run bank received $16.2 billion from the People's Bank of China (PBOC), but neither the PBOC nor the five other banks involved seemed willing to speak on the matter.
"We will make an announcement if we have any news," a PBOC spokesman told Reuters.
Citing two bank analysts as sources, initial reports of the monetary stimulus injection came from the Chinese website, Sina, early Wednesday morning, and with hardly more than a peep from the PBOC or banks, the markets were left in the dark on how much interest was being charged.
In recent months, the PBOC had been using a different approach outside of bureaucratic guidance, which involved pushing interest rates up and down and betting on market forces to distribute money to borrowers and lenders, said the New York Times.
But this week's loans certainly don't walk that walk. The five recipient banks were the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications.
These banks are likely to lend the money to well connected industries and individuals working in the advanced electronics and construction of mass-market housing sectors, according to the New York Times.
It's not unusual for the PBOC to make occasional loans to the biggest Chinese banks through a program called the standing loan facility, which was also used this week, but that specific program is usually used to inject smaller amounts of money which would not be considered monetary stimulus.
On the other side of Eurasia, the European Central Bank announced Thursday that it will loan approximately $107 billion to 255 commercial banks next week in an effort to encourage lending to businesses and households in the private sector, and to help jump start the Eurozone economy. It's part of a larger effort by the central bank, which will reportedly inject as much as $1.2 trillion.
