The issue price of a CBBC includes funding costs.
When money was scarce, they would face high funding costs and could slow down in response.
That would lower their funding costs and in turn bring down borrowing rates for small businesses.
So the Banks are hanging on, able to do so only because low interest rates mean their funding cost is low.
However, getting a loan means getting in debt, and will cause funding cost and financial risks.
The funding cost for the liquidity support will be about the same as the open market operations rate over the same period, the PBOC said, without specifying any requirement for collateral.
Higher funding costs are also squeezing Banks' profit margins in the more vulnerable economies.
As a result, its funding costs are half the industry average.
