China cuts reserve requirements ratio by 0.25 percentage points

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China cuts reserve requirements ratio by 0.25 percentage points

Photo Agencies BEIJING - China's central bank said on Friday that it has decided to reduce the reserve requirement ratio RRR for eligible financial institutions by 0.25 percentage points to keep liquidity reasonably ample and lower comprehensive financing costs.

A 5 percent RRR will be implemented on December 5, except for financial institutions that have already implemented a 5 percent RRR, the People's Bank of China PBOC said in a statement.

The PBOC said that a reduction in the cash amount that banks must hold in reserve is expected to free up 500 billion yuan about $70.09 billion in long-term liquidity.

The average RRR for Chinese financial institutions will be about 7.8 percent after the reduction, according to the central bank.

The PBOC said it will strengthen support for the real economy, strengthen support for the real economy, and use monetary policy tools to adjust both the monetary aggregate and the monetary structure.