China's central bank injected a net 20 billion yuan (about 3.02 billion U.S. dollars) into the market via open market operations Monday to ease the liquidity strain.

The People's Bank of China (PBOC) conducted 80 billion yuan of reverse repos, according to the bank. Meanwhile, 60 billion yuan of reverse repos matured.

A reverse repo is a process by which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

On Monday, the PBOC conducted 40 billion yuan of seven-day reverse repos priced to yield 2.45 percent, and 40 billion yuan of 28-day contracts to yield 2.75 percent.

Maturing reverse repos will withdraw 480 billion yuan from the market this week. The central bank drained a net 510 billion yuan via open market operations last week, the largest weekly withdrawal in nearly 10 months.

The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.

China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections.

Such a policy stance is crucial for China as it has to juggle the task of financial deleveraging, aimed at defusing risk and curbing asset bubbles, while shoring up the economy. 

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