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China Cuts Reserve Requirement Ratio To Boost Economy
Published on: 2023-03-20
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China has cut the amount of cash banks must keep in reserve at the central bank in an effort to support lending and strengthen the economy’s recovery from pandemic restrictions and a property market slump.
 

The People’s Bank of China reduced the reserve requirement ratio for almost all banks by 0.25 percentage points, effective from March 27, it said in a statement on Friday. The PBOC last cut the RRR in December, by the same magnitude.
 

Economists said the cut was aimed at ensuring liquidity in the banking system to sustain the rapid pace of lending seen in January and February. The move sends a “clear signal” that the authorities intend to guide financial institutions to better stabilize growth, expand domestic demand and consolidate the recovery, said the Economic Daily, a newspaper affiliated with the State Council, China’s cabinet, in a Saturday commentary.
 

The magnitude of the reduction was based on consideration that the RRR is currently at “a relatively low” level and that the monetary policy should remain prudent, according to the article. The PBOC has delivered 14 RRR cuts since 2018, lowering the weighted average ratio for banks to under 8 percent from nearly 15 percent and releasing more than 11 trillion yuan ($1.6 trillion) in long-term liquidity, it added.

央行年内首次降准25个百分点释放中长期流动性超5000亿

中国人民银行17日发布重磅消息,为推动经济实现质的有效提升和量的合理增长,打好宏观政策组合拳,提高服务实体经济水平,保持银行体系流动性合理充裕,中国人民银行决定于2023年3月27日降低金融机构存款准备金率0.25个百分点(不含已执行5%存款准备金率的金融机构)。本次下调后,金融机构加权平均存款准备金率约为7.6%。根据测算,预计本次降准向银行体系释放中长期流动性超5000亿元,每年降低银行资本成本约70亿元。

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