The People's Bank of China announced on October 26 that it has decided to establish large redemption and exchange facilities for non-banks in the bond market. Zhang Jun, chief economist at China Galaxy Securities, said that in the context of current changes in the financial structure, improving emergency liquidity support mechanisms for non-bank institutions can further enhance the central bank's ability to maintain financial stability. Under normal market conditions, asset management product redemptions can usually be handled through cash reserves, asset maturity repayments, and normal market transactions. When multiple institutions face greater redemption pressure at the same time, centralized bond sales may lower market prices, further affect the net value of products and investors' expectations, and form a mutually reinforcing cycle of redemption and sell-off. A typical example is the “redemption wave” of financial management at the end of 2022. Zhang Jun further analyzed that the purpose of setting up this tool is to block the redemption and sell-off cycle and maintain the bottom line that systemic risks do not occur when there are large fluctuations in the bond market. The tool is used in specific situations. It is not a daily liquidity supply; it is limited to extreme situations where the bond market fluctuates greatly and asset management institutions face group liquidity risks. Daily liquidity requirements are mainly addressed by institutions through their own management and market financing; when the market is under pressure and normal financing and trading functions are clearly affected, tools can provide corresponding support to buy time for institutions to adjust assets in an orderly manner and resume normal operation of the market. Under normal circumstances, credit risks arising from the deterioration of the institution's own credit status, credit debt default, etc. are still handled properly in accordance with the principles of marketization and legalization, which is different from the functional positioning of tools to deal with liquidity risks. This arrangement effectively links daily management with emergency protection, helps stabilize market expectations, and at the same time preserves the motivation of market players to actively manage liquidity risk.

The People's Bank of China announced on October 26 that it has decided to establish large redemption and exchange facilities for non-banks in the bond market. Zhang Jun, chief economist at China Galaxy Securities, said that in the context of current changes in the financial structure, improving emergency liquidity support mechanisms for non-bank institutions can further enhance the central bank's ability to maintain financial stability. Under normal market conditions, asset management product redemptions can usually be handled through cash reserves, asset maturity repayments, and normal market transactions. When multiple institutions face greater redemption pressure at the same time, centralized bond sales may lower market prices, further affect the net value of products and investors' expectations, and form a mutually reinforcing cycle of redemption and sell-off. A typical example is the “redemption wave” of financial management at the end of 2022. Zhang Jun further analyzed that the purpose of setting up this tool is to block the redemption and sell-off cycle and maintain the bottom line that systemic risks do not occur when there are large fluctuations in the bond market. The tool is used in specific situations. It is not a daily liquidity supply; it is limited to extreme situations where the bond market fluctuates greatly and asset management institutions face group liquidity risks. Daily liquidity requirements are mainly addressed by institutions through their own management and market financing; when the market is under pressure and normal financing and trading functions are clearly affected, tools can provide corresponding support to buy time for institutions to adjust assets in an orderly manner and resume normal operation of the market. Under normal circumstances, credit risks arising from the deterioration of the institution's own credit status, credit debt default, etc. are still handled properly in accordance with the principles of marketization and legalization, which is different from the functional positioning of tools to deal with liquidity risks. This arrangement effectively links daily management with emergency protection, helps stabilize market expectations, and at the same time preserves the motivation of market players to actively manage liquidity risk.