The People’s Bank of China has formally established a swap facility for non-bank financial institutions facing large redemptions, the Bond Market NBFI Swap Facility, or BNSF, in open market operations announcement No. 12 of 2026, dated October 26. In the specific scenario of asset managers facing collective liquidity risk and systemic pressure in the bond market, the facility supports systemically important bank wealth management subsidiaries and public fund managers, or their parent banks and parent securities firms, in borrowing central bank bills from the People’s Bank for repo financing in the market. The borrowed bills fund purchases of eligible bonds or product shares of the institution’s own public products that have been hit by redemptions, and those purchases are pledged to the central bank. Participating institutions must keep meeting prudential requirements for financial markets and maintain market discipline, the announcement says.
The establishment formalises the tool Governor Pan Gongsheng announced in prospect on October 19, when he described it as a bond market stabilisation mechanism and a new macroprudential instrument, to be used only when a redemption and sell-off loop takes hold, with high-grade collateral required so the backstop does not distort pricing or create an expectation of a blanket guarantee. Monday’s announcement sets out the name, the eligible institutions and the swap mechanics, but no size, pricing or tenor, and the facility is contingent: nothing in the notice activates it.