China's central bank moves to boost liquidity

By Wang Yu and  Wang Peiwei (People's Daily Overseas Edition)

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09:41, December 03, 2011

Edited and translated by People's Daily Online

The People's Bank of China announced on the evening of Nov. 30 that effective Dec. 5, 2011, the RMB deposit reserve ratio of deposit-taking financial institutions will be lowered 0.5 percentage points to help ease the liquidity pressure on banks and promote reasonable growth of money and credit.

Releases liquidity

"The central bank's decision to lower the deposit reserve ratio has given major consideration to the high level of the current deposit-reserve ratio, the decrease of funds outstanding for foreign exchange and other factors, which have led to tight bank liquidity and curbed credit availability of banks," said Lian Ping, chief economist of the Bank of Communications of China. 

After the adjustment, the deposit-reserve ratio will be 21 percent for large financial institutions and 17.5 percent for small and medium sized financial institutions, and more than 400 billion yuan of liquidity will be released. 

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