China "planning new monetary tool to guide medium-term interest rates"

SHANGHAI (Reuters) - China's central bank is planning to create a new monetary tool that will help adjust supply to the country's monetary base and consequently help guide medium-term interest rates, the semi-official China Business News said on Wednesday.

The new tool is a type of supplementary lending tool supported by collateral. Temporarily called "Pledged Supplementary Lending" (PSL), the tool is similar to the central bank's existing re-lending monetary tool, the newspaper said.

"The central bank wants to use the interest rates on the PSL to create medium-term (benchmark) interest rates," the newspaper said.

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