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BEIJING -- China"s central bank has released measures to regulate automatic pledge financing business to improve financing efficiency and optimize business.

The regulation specifies the financing balance limit of different financial institutions, unifies daytime and overnight rates of automatic pledge financing and expands the scope of collateral bonds, said the People"s Bank of China (PBOC) in a statement.

Automatic pledge financing business is a payment support mechanism for financial institutions. It automatically provides funding when the clearing accounts of financial institutions face a funding shortage.

The mechanism helps improve clearing efficiency and ensure clearing security, but is not a liquidity tool, said the PBOC.

The regulation will take effect on Jan 29, 2018, replacing the interim regulative measures released in 2005.


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