As the Spring Festival approaches, the People's Bank of China has significantly increased its efforts in open market operations. On February 10th, the central bank conducted a 7-day reverse repurchase operation worth 311.4 billion yuan through interest rate bidding, with the winning bid rate remaining unchanged at 1.40%. Given that 105.5 billion yuan of reverse repurchase expired on that day, this move achieved a net daily investment of 205.9 billion yuan, clearly conveying the central bank's intention to maintain reasonable and sufficient liquidity and stabilize market expectations during the special Spring Festival period. Before the Spring Festival, the liquidity of the banking system usually faces multiple factors of disturbance. On the one hand, the concentrated release of residents' cash demand has resulted in significant "cash leakage". Despite the popularity of electronic payments, there is still a strong demand for traditional cash withdrawal habits, especially red envelopes, before festivals; On the other hand, the public market has a large amount of funds due, with 405.5 billion yuan of 7-day reverse repurchase due this week and 500 billion yuan of 6-month buyout reverse repurchase due. According to market estimates, the funding gap before the Spring Festival may reach over 2.2 trillion yuan. In addition, this year's Spring Festival holiday lasted for 9 days, which may prolong the time for funds to stay outside the system, further exacerbating the pressure of bank over storage consumption. In this context, the recent open market operations of the central bank have demonstrated the characteristics of forward-looking layout and flexible regulation. To hedge against the impact of the Spring Festival holiday in advance, the central bank has launched 300 billion yuan of 14 day reverse repurchase on February 5th and 6th, directly covering the demand for cross holiday funds. If the 14 day tool maintains moderate strength this week, coupled with today's significantly increased 7-day reverse repurchase, the total amount of cross cutting funds injected by the central bank will be able to effectively match or even cover the estimated funding gap. The flexible combination of this "7-day+14 day" reverse repurchase tool ensures sufficient short-term liquidity supply and a reasonable maturity structure. Under the protection of multiple operations by the central bank, on February 10th, the margin of market funds loosened, and the 1-day pledged repo (DR001) between banks and deposits opened at 1.3%, with the weighted average price of the previous day at 1.3347%; The 7-day collateralized repo (DR007) between banks opened at 1.47%, with a weighted average price of 1.4909% from the previous day. Several experts believe that the series of operations by the central bank have ensured overall control of pre holiday liquidity pressure, and the market is expected to smoothly cross the year. Wang Qing, Chief Macro Analyst of Dongfang Jincheng, stated that the central bank flexibly combines various tools for regulation, and it is expected that the tightening of market liquidity this week will be lower than the same period in previous years. Dong Ximiao, Chief Economist of China Merchants Association, believes that the central bank has accurately and effectively hedged seasonal funding gaps through multi term and large-scale open market operations before the Spring Festival. This not only ensures the smooth operation of financial institutions and payment systems, but also creates a suitable monetary and financial environment for the normal development of livelihood and economic activities during the holiday period. After the holiday, with a large amount of cash returning, liquidity is expected to return to a loose pattern. (New Society)