The People’s Bank of China (PBOC) has announced a reduction to the reserve ratio that will apply across the board to Chinese banking sector financial institutions.
On 15 April PBOC announced its decision to reduce the depository reserve ratio for financial institutions by 0.25 percentage points starting from 25 April, with the exception of those institutions for which a 5% ratio is currently in place.
A PBOC spokesperson said that the move is expected to unleash around 530 billion yuan in long-term funds, that is intended to “support the development of the real economy, and expedite declines in the cost of comprehensive financing amidst stability.”
Other goals of the reduction include guiding financial institutions to “actively support industries and small businesses severely affected by the pandemic,” as well as to reduce annual costs of financial institutions by approximately 6.5 billion yuan.
