On November 24, the Ministry of Finance and the People's Bank of China conducted the 11th central treasury cash management commercial bank deposit auction for 2025, using an interest rate tender with a single-price bidding method. The deposit term for this auction was one month, with a total winning bid of 120 billion yuan and an interest rate of 1.73%, down 3 basis points from the previous rate of 1.76%. This further signals reasonable and ample liquidity in the banking system.
Treasury cash deposits refer to the operation where the Ministry of Finance and the PBOC deposit treasury cash into commercial banks, with the interest rate determined through competitive bidding. A decline in this rate typically indicates weaker demand from commercial banks for such funds, reflecting that the banking system currently maintains reasonable and ample liquidity without significant funding shortages.
Looking at the full-year operations, the central treasury cash deposits have been conducted 12 times this year, covering one-month, two-month, and three-month terms. In the first six auctions, the winning rates were relatively higher: three two-month deposits with rates of 2.15%, 2.05%, and 1.81%; one three-month deposit at 1.82%; and two one-month deposits at 2% and 2.08%. The most recent six auctions were all one-month deposits, with rates gradually declining from 1.78% to the current 1.73%, showing a mild downward trend.
Notably, while the treasury deposit rate has declined, money market rates have seen a slight uptick. On November 24, the Shanghai Interbank Offered Rate (Shibor) data showed that, except for the overnight rate which dipped slightly, other tenors rose. By 11:00 a.m., the overnight Shibor fell 0.4 basis points to 1.3160%, while the seven-day Shibor rose 3 basis points to 1.447%. The one-month Shibor edged up 0.1 basis points to 1.52%, and the three-month Shibor increased 0.2 basis points to 1.58%.
Ming Ming, chief economist at CITIC Securities, explained this divergence as stemming from different pricing logics for the two types of funds. Treasury cash deposit rates are set by the Ministry of Finance and the PBOC through auctions, sourced from idle treasury funds with fixed terms, and must be managed as general deposits by banks. In contrast, Shibor reflects short-term interbank borrowing rates used to address immediate liquidity gaps, making it more sensitive to short-term supply-demand dynamics. The divergence is likely temporary, driven by month-end funding pressures.
To stabilize short-term liquidity fluctuations, the PBOC has been injecting funds through various monetary tools. On November 24, it conducted a 338.7 billion yuan seven-day reverse repo, resulting in a net injection of 55.7 billion yuan. The central bank has maintained net injections for several consecutive days, including 115 billion yuan on November 19, 110 billion yuan on November 20, and 162.2 billion yuan on November 21. Additionally, the PBOC plans to conduct a 1 trillion yuan Medium-Term Lending Facility (MLF) operation on November 25, reinforcing a multi-layered liquidity management framework.
The lower treasury deposit rate will have practical market implications. According to Ming Ming, the decline in the one-month rate helps reduce short-term funding costs for commercial banks, improving interest margins and signaling a modest easing stance. However, given the limited scale of the operation, its impact is largely symbolic.
Looking ahead, the one-month treasury deposit rate is expected to remain stable. Ming Ming noted that the PBOC’s accommodative policy stance remains unchanged. Although year-end liquidity typically tightens seasonally, the central bank’s commitment to offsetting funding pressures through open market operations is clear, suggesting stability in the one-month treasury deposit rate.