The People’s Bank of China (PBC) has announced that it is scheduled to cut the required reserve ratio (RRR) for domestic financial institutions (excluding those that have already implemented an RRR of five percent) by 0.5 percentage points on December 15, 2021, aiming to support the development of the real economy and steadily bring down overall financing costs. The weighted average RRR for financial institutions will decline to 8.4 percent after the cut.
The PBC said it will continue to implement a sound monetary policy. The PBC will keep liquidity adequate at a reasonable level, and keep the growth of money supply and the aggregate financing to the real economy basically in line with the nominal GDP growth.
The PBC said the cut in the RRR this time will release about RMB 1.2 trillion ($0.19 trillion) of long-term funds.