Standing Lending Facility 常备借贷便利

Standing Lending Facility 常备借贷便利

Standing Lending Facility (SLF) is a tool used by the People’s Bank of China to smooth out liquidity fluctuations and influence capital costs. The SLF tool was first mentioned by the central bank in 2013 in a report on the execution of monetary policies in the first quarter of that year. The mechanism lets policy banks and commercial lenders ask the central bank for loans with maturities ranging from one to three months. Interest rates are determined on a case-to-case basis. The SLF is more flexible than cutting interest rates and the reserve-requirement ratio. It enables the central bank to target banks that need liquidity support and punish delinquents without affecting the others. It also allows the central bank to influence short-term interest rates more directly than through regulating the money supply.