More on the new China lending to smaller firms

Yesterday I posted on the new tool being put in place by the People's Bank of China

• to supply lower-cost liquidity for up to 3 years to banks lending more to smaller firms

The new facility has a name: Targeted Medium-term Lending Facility (TMLF).

Its key points of difference to the already in place MLF:

• aims to release long-term liquidity to support private and small companies (TMLF can be used for three years, compared to MLF funds which mature in a year)
• one-year interest rate on the TMLF will be 3.15% (MLF is 3.3%)

Large commercial banks, joint-stock commercial banks and big city commercial banks showing great support to the real economy can apply for the TMLF says the PBOC.