China to cut banks' reserve requirements to spur growth

Monday, 07 January 2019 10:46:15 (GMT+3)   |   Shanghai

China's central bank stated on January 4 that it will cut the amount of cash that most banks must hold as reserves in order to further support the development of the real economy, optimize liquidity structures and reduce financing costs.

The reserve requirement reduction is the first announced by the People's Bank of China (PBOC) this year.

The reserve requirement ratios (RRRs) - currently at 13.0-14.5 percent for large institutions and at 11.0-12.5 percent for smaller banks - will be cut by 50 basis points effective as of January 15 and by another 50 basis points effective as of January 25, the PBOC said.

The central bank will inject a net RMB 800 billion ($115.3 billion) in cash into the banking system with these measures, by releasing a total of RMB 1.5 trillion ($0.22 trillion) in liquidity.

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