China instructs major state-owned banks to reduce lending in the interbank market to ease a cash glut, according to people familiar with the matter cited by Bloomberg and the Financial Post. The measure is aimed at limiting how far borrowing costs fall below China’s policy interest rate. The outlets report that the guidance is focused specifically on interbank lending—transactions between financial institutions—rather than on broader credit growth. Both reports describe the policy as a way to prevent rates in the interbank market from drifting too low, which can signal excessive liquidity and potentially distort money-market conditions. The accounts do not provide details on the size of the reduction, the timing, or whether the banks face specific numeric targets. The reports also do not cite immediate market-wide impacts, but they frame the action as part of ongoing efforts to manage liquidity conditions and keep short-term funding costs aligned with policy settings.