02/12/2015, 00.00
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For New Year, China's central bank has to come up with 610 billion in cash

Such an amount is what the Chinese are expect to spend during the Lunar New Year holidays. Central bank officials must find enough liquidity without stoking inflation. At the same time, they must ensure that money markets do not seize up, and affect consumer spending. Compounding everything, some 24 IPOs are expected to lock up about 2 trillion yuan.

Beijing (AsiaNews) - As if juggling interest rates, the yuan's internationalisation and credit risks is not hard enough, these days the People's Bank of China (PBOC) has a more complicated puzzle to solve: finding 610 billion yuan (US$ 100 billion) in liquidity to fund the binge of travelling, shopping, drinking and gifting associated with Lunar New Year festivities.

As the stroke of midnight rings in the Year of the Goat next week (19 February), workers will be on their way home for the holiday, which runs until 5 March. Between the two dates, about 2.8 billion trips will be made, including 295 million by trains, according to government estimates.

Traditionally, Chinese spend the holiday with family, eating choice food, exchanging gifts, watching fireworks, and handing out 'red envelopes'. At work, bosses will have handed out freshly printed cash, in varying amounts, stuffed in red envelopes to their employees. Parents will do the same with their kids, as will grandparents will their grandsons and granddaughters.

For the PBOC, this is a major problem. To prevent money markets from seizing up, the PBOC has been shovelling cash into the system via reverse repurchase agreements (buying securities from banks), expanding standing lending facility and doing whatever else it can whilst trying to avoid to stoke inflation.

This year, the bank's headache will be compounded by some 24 IPOs that will lock up an estimated 2 trillion yuan this week.

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