China cuts some banks' reserve requirements to stimulate growth

Monday, 08 October 2018 14:35:37 (GMT+3)   |   Shanghai

On October 7, China central bank announced a cut in the amount of cash that most banks must hold as reserves, with the aim of lower financing costs and stimulating growth amid concerns over a potential economic impact from the escalating trade dispute with the United States.

The reserve requirement cut, the fourth by the People's Bank of China (PBOC) this year, comes after Beijing has pledged to expedite plans to invest billions of dollars in infrastructure projects as the economy shows signs of cooling further.

The reserve requirement ratios (RRRs) - currently 15.5 percent for large institutions and 13.5 percent for smaller banks - will be cut by 100 basis points effective as of October 15, the PBOC said.

The central bank will inject a net RMB 750 billion ($109.2 billion) in cash into the banking system with the cut by releasing a total of RMB 1.2 trillion ($0.17 trillion) in liquidity, with RMB 450 billion ($65.6 billion) of that to offset maturing medium-term lending facility (MLF) loans.

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