China to cut banks’ reserve requirement ratio
China’s central bank said it would reduce the portion of deposits commercial banks are required to set aside as reserves, releasing billions of dollars to the financial system to help boost economic growth.
The People’s Bank of China said on Wednesday that it would lower its reserve requirement ratio for all banks by 0.5 percentage point, effective January 6, injecting more than 800 billion yuan ($163.2bn) into the financial system.
The move, which was widely expected, came after Chinese Premier Li Keqiang last month pledged to encourage more bank loans to the nation’s cash-strapped small companies.
The official reserve requirement ratio for most large banks will fall to 12.5 per cent from 13 per cent after the cut takes effect, while the ratio for smaller lenders will drop to 10.5 per cent from 11 per cent.
Beijing has in recent months stepped up efforts to boost a weakening economy by pouring more funds into infrastructure, among other measures.
Dow Jones Newswires