Chinese Central Bank Shoots Down Rumours of Required Reserve Ratio Cut Once Again

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The People’s Bank of China (PBOC) has issued its second refutation in under a month of reports that it plans to further reduce the required reserve ratio for domestic banks.

In an announcement published via its official news site on 23 April the Chinese central bank denied reports that it planned to implement a targeted cut to the require reserve ratio of 1 percentage point, which would be directed primarily at rural financial institutions including rural commercial banks and rural credit societies.

PBOC said that “[this] news is untrue, and the central bank currently does not have any new policies for targeted reserve cuts.”

PBOC also denied reports that it would implement “dynamic adjustment” of the reserve ratios of certain financial institutions based on their macro-prudential assessment results for the first quarter.

“At present the central bank is certainly implementing a financial inclusion targeted reserve cut policy, but each year it will only implement dynamic assessment and adjustment at the start of each year,” said PBOC.

“In January of this year the central bank already undertook a dynamic assessment of 2018’s financial inclusion targeted reserve cuts – this assessment and adjustment will only be implemented at the start of each year, as opposed to on a quarterly basis.”

The announcement marks the second time in less than a month that PBOC has denied reports that it plans to implement further cuts to the required reserve ratio.

At the start of this month PBOC said that prior rumours that it planned to cut the required reserve ratio were just an April Fool’s joke, while referring the matter to China’s public security authorities for handling.

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