PBOC to Unleash $115 Billion with Reserve Ratio Cut for Chinese Banks

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The Chinese central bank has unveiled another cut to the required reserve ratio for banks as part of efforts to bolster easing economic growth.

The People’s Bank of China (PBOC) announced on Wednesday via its official website that it will cut the reserve requirement ratio (RRR) by 50 basis points on 6 January.

The move marks the eighth cut to the RRR since early 2018, amidst efforts to prop up flagging growth in the Chinese economy.

According to PBOC officials the cut is an across-the-board cut, with the RRR for China’s big banks set to fall to 12.5%.

PBOC said it expects the cut to unleash over 800 billion yuan (USD$114.91 billion) in long-term funds, which will “effectively increase stable fund sources for financial institutions to support the real economy and reduce the cost of funds for financial institutions to support the real economy.”

“This cut will keep liquidity at rationally ample levels, be of benefit to achieving a correspondence between growth in the scale of currency loans and total social financing and economic growth.”

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