Core Viewpoint - The People's Bank of China (PBOC) has announced a shift in its Medium-term Lending Facility (MLF) operations to a multiple price bidding system, indicating a significant change in the monetary policy framework and the gradual withdrawal of MLF's policy interest rate attributes [2][3][6]. Group 1: MLF Operation Changes - The MLF will now operate under a multiple price bidding system, moving away from a unified bidding rate, which signifies the complete withdrawal of its policy interest rate characteristics [3][6]. - This change is part of a broader strategy to clarify the role of MLF as a liquidity provision tool, focusing on providing one-year liquidity [6][8]. - The PBOC's liquidity management will become more efficient and precise, balancing multiple objectives with a more scientific and flexible approach [6]. Group 2: Impact on Banking Sector - The adoption of multiple price bidding is expected to lower the overall funding costs for MLF, alleviating pressure on banks' net interest margins [8]. - Currently, the one-year interbank certificate of deposit rate for major banks is around 1.95%, with smaller banks potentially facing higher rates, indicating a market-driven approach to pricing [8]. - The recent MLF operation of 450 billion yuan represents a net injection of 630 billion yuan, marking the first net injection since July 2024, reflecting a moderately accommodative monetary policy stance [8].