Aiming to further support the development of the real economy and lower real financing costs, on January 1 the People's Bank of China (PBC) announced a lowering of the required reserve ratio for financial institutions by 0.5 percentage points effective as of January 6 (excluding finance companies, financial leasing companies and auto finance companies).
The PBC will continue to implement a sound monetary policy, maintaining a flexible and appropriate rather than massive supply of liquidity, so as to create a favorable monetary and financial environment for high-quality economic development and supply-side structural reform.
The lower RRR this time will release around RMB 800.0 billion ($115.0 billion), which will effectively increase stable sources of funds and reduce the cost of funds for financial institutions, thereby supporting the real economy, especially in the period before the Chinese New Year holiday.