The People’s Bank of China (PBoC) announced on September 6 that it will reduce the reserve requirement ratio (RRR) for financial organs by 0.5 percent as of September 16.
The People’s Bank of China (PBoC) announced on September 6 that it will reduce the reserve requirement ratio (RRR) for financial organs by 0.5 percent as of September 16. The latest cut is a quick response to the September 4 meeting of the State Council where top leaders proposed promoting the real economy by means of a general and targeted RRR cut. To further support micro and small private enterprises, the PBoC also announced it will reduce the RRR by an additional 1 percent for local commercial banks that operate only within a provincial region. The targeted cut will be implemented in two stages, on October 15 and November 15, 0.5 percent each time. Analysts estimate that the two cuts will release about 900 billion yuan (US$128.6b) in total lending, with the general cut 800 billion yuan (US$114.3b) and the targeted one 100 billion yuan (US$14.3b). Wen Bin, chief researcher of China Minsheng Bank, told china.com.cn, a news portal under the news office of the State Council, that the cuts were necessary as central banks worldwide were re-adopting monetary easing policies and that the cuts will help to activate China’s financial markets.