People's Bank of China Establishes Non-Bank Large Redemption Swap Facility for Bond Market

The People's Bank of China (PBOC) Open Market Operations Office has announced the establishment of a non-bank large redemption swap facility for the bond market, referred to as BNSF. This initiative aims to build a scientific and robust monetary policy system and macro-prudential management framework to maintain stability in the bond market. The relevant document is the PBOC Open Market Operations Announcement No. 12 of 2026. The announcement states that in situations where asset management institutions face liquidity risks and the bond market experiences systemic pressure, support will be provided to bank wealth management subsidiaries and public fund managers with systemic impact. They can borrow central bank bills from the PBOC for market repurchase financing to purchase eligible bonds or product shares of public products that have been redeemed, and pledge them to the PBOC. Participating institutions must continuously meet the prudential management requirements of the financial market and uphold market discipline.

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