Imagine the Fed tweeting the taper

December 23, 2013: 7:47 AM ET
china central bank weibo
China's central bank used its new Weibo account to announce it was pumping $50 billion into the country's financial system.
HONG KONG (CNNMoney)

Can you imagine the Federal Reserve tweeting the taper? In China, that's not as far-fetched as it sounds.

China's central bank has only been microblogging for three weeks, and it's already taking to social media to make major policy announcements.

Facing a cash crunch for the second time this year, the People's Bank of China posted a series of messages on Weibo -- the country's answer to Twitter -- last week, saying it was providing almost $50 billion to select banks to help them make payments owed to each other.

The first post, on Thursday, said the central bank was injecting additional liquidity into the system but gave no details. Investors had to wait until a second Weibo post late Friday night to find out how much cash was being provided.

But the damage had already been done. Interbank lending rates soared, and the Shanghai Composite fell for a ninth consecutive session.

Related story: China's $50 billion move to avert cash crunch

That might be comparable to the Fed using Twitter (TWTR) to make last week's announcement -- in 130 characters or less -- that it was dialing back its bond-buying program.

"Fed tapers by $10 billion starting in January" would have captured the essentials in a tweet, but it was the lengthy explanatory statement and news conference with Ben Bernanke that gave investors the guidance they needed.

Such policy decisions in China are typically splashed on the pages of official state media, and the decision to use Weibo appears to have caught many by surprise.

It's hard to say when investors realized the magnitude of the online announcement by China's central bank, which only launched its microblog account on Dec. 1.

China's Weibo a better bet than Twitter?

Still, it seems the market is catching up fast. Just three weeks and 33 posts in, China's central bank already counts 396,205 followers. (The Fed falls short, clocking in with 110,635 followers on Twitter.)

Related story: Twitter needs an Asian strategy

The social media savvy reaches beyond China's central bank into other areas of financial activity. The China Securities Regulatory Commission, for example, has already built up a following of 1.4 million on Weibo after joining on Oct. 15.

The central bank cash infusion to the banking system came after investors were spooked as indicators of tight liquidity surged to heights last seen in June, when Chinese markets were roiled by a major credit crunch.

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