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China's RRR cut takes effect

12-05-2011 15:17 BJT

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The 50 basis point cut in reserve requirement ratio by China's central bank takes effect Monday. Through the move, the People's Bank of China will inject nearly 400 billion yuan of liquidity into the banking system.

After the adjustment, China's major commercial banks will need to park 21 percent of their cash with the central bank. For, mid- and smaller commercial banks, the reserve ratio will stand at 17.5 percent.

PBOC data shows that at the end of October, there was almost 80 trillion in RMB-denominated deposits stored in Chinese banks.

The PBOC announced the RRR cut last Wednesday, the first such move in almost three years. Economists believe the central bank's decision to go early was a direct response to the sudden slump seen during trading in China's capital markets.

They also say, it will ease the capital crunch faced many enterprises and ensure China's stable economic growth.

 

 

Editor:Liu Fang |Source: CNTV.CN

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