GC: China’s central bank provides relief for squeezed European repo market

The People’s Bank of China has used its extensive holdings of European government bonds to act as an “escape valve” at times when the European repo market has become squeezed, such as year-end and quarter-end periods when certain French and German bonds were unobtainable at almost any price.

Global Capital reported that senior repo market sources said that the Chinese central bank, which is not constrained by banking regulation or by the European reporting calendar, has been feeding scarce collateral into the European market.

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