Central bank lowers cash reserve requirement
China’s central bank lowered the amount of cash that all financial institutions need to reserve, a move aimed at helping spur bank lending amid a slowing economy.
The 1-percentage point cut by the People’s Bank of China (PBOC) effective on Monday is expected to release liquidity of at least 1.2 trillion yuan ($197 billion) to support economic growth.
The bank lowered the reserve requirement ratio by 100 basis points to 18.5 percent. It is the second cut in three months, and the biggest slash since November 2008.
The move also includes an extra 1-percentage point cut in the ratio to commercial banks for agricultural services and a further cut by 0.5 percentage points to eligible banks that lend a certain amount of money to agricultural borrowers or to small and micro businesses, according to the bank.
The central bank has also cut interest rates twice since November to lower borrowing costs and spur demand.