China's Central Bank is now facing the challenge of injecting liquidity into the financial system.

ANBOUND's guest researcher Zhong Wei believes that with the current continuous decline of the foreign exchange reserves, the reserves and excess reserve funds have decreased as well, and this has caused the balance sheet of China's Central Bank to shrink.

To prevent this, the need for refinancing and long-term credit swap between the Central Bank and commercial banks is increasing.

The overlapping of the balance sheets of the Central Bank and the commercial banks has formed a necessary foundation for financial super-regulatory led by the Central Bank and the future asset securitization spearheaded by the Central Bank.