The People's Bank of China (PBC), the central bank, allocated 10 billion-yuan (US$1.2 billion) in form of reloan to initiate a protection fund for securities firms, sources with the PBC confirmed it Tuesday.

The move is not aimed at assisting the securities firms but at setting up a fund to protect securities investors, said a source close with PBC.

The news is believed by market analysts to clarify market rumor that the central bank has appropriated 10 billion yuan of reloan for China Securities Depository and Clearing Company Limited (CSDCC) as fluid support for securities firms designated by China Securities Regulatory Commission (CSRC).

As the special capital for establishing the protection fund pertaining to securities investors, the money will be used in accordance with relevant regulations of the fund and will be repaid by the fund, according to the PBC.

The CSRC, China's stock market watchdog, claimed this February that China will establish a protection fund for securities investors.

As the special regulations on the fund has not been published, the scale of the fund is yet to calculate.

(Xinhua News Agency July 20, 2005)