China's central bank said it will carry out temporary repos or reverse repos based on market conditions starting from Monday.

The move aims to keep liquidity reasonable and ample in the banking system and improve the accuracy and effectiveness of open market operations, the central bank said in a statement.

These overnight temporary repos and reverse repos will be conducted through bidding, with their interest rates set based on the seven-day reverse repos.

Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited, said these operations will further enrich monetary policy toolbox and help the central bank adjust market liquidity in a more timely and accurate manner.

Temporary reverse repos can provide funds to institutions when the market is under liquidity strains, while temporary repos can help drain excess liquidity, Dong added.

A repo, or repurchase agreement, is a process in which the central bank sells bonds to financial institutions and promises to buy them back in the future.

In the government work report, the country vowed to continue to implement a proactive fiscal policy and a prudent monetary policy this year. It also pledged to maintain adequate liquidity at a proper level and see that aggregate financing and money supply stay in step with the projected economic growth and Consumer Price Index increase. 

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