BEIJING - China's central bank on Monday conducted 20 billion yuan ($3.06 billion) of reverse repos to maintain reasonably ample liquidity in the banking system.

The interest rate for the seven-day reverse repos was set at 2.2 percent, according to a statement on the website of the People's Bank of China.

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

The overnight Shanghai Interbank Offered Rate, which measures the borrowing cost of China's interbank market, increased 27.1 basis points to 1.702 percent Monday.

The seven-day rate decreased 3.5 basis points to 2.143 percent, and the one-year rate dropped 0.8 basis points to 3.231 percent.

China pursues a prudent monetary policy in a more flexible and appropriate way, according to this year's government work report.