People's Bank of China decided on Monday to strengthen the economy of this Asian superpower. An injection of 1.2 trillion yen ($ 174 billion) landed in banks through repurchase agreements (also known as REPOs) to allow banks to increase their liquidity.
PBoC thus created and printed out money from one day to another in the amount of the total capitalization of the largest cryptocurrency - bitcoin. There were several reasons for doing so. The first and perhaps the clearest is the coronavirus and its spread, whose negative impact on the Chinese economy, according to several analysts, can be seen even now. According to a report published by the People's Bank of China, an injection of 1.2 trillion yen is necessary to keep the impact of the virus as small as possible.
The second reason for introducing this stimulus is a slowdown of the Chinese economy (not only because of the coronavirus). The People's Bank of China has therefore decided to create a document with 30 steps to solve the economic problems, and this huge injection is to be one of these steps.
However, China is not the only country in such a situation. For example, huge money printing has been taking place in the US since September, when the Federal Reserve (US Central Bank) allowed billions of dollars to be printed. In addition, President Trump supported this decision through large tax reliefs. The aim of all these decisions is to try to restart the economy, although these efforts seem to be in vain.