The People's Bank of China Lowers Reserve Requirement Ratio by 0.5%P... Average 8.4% in Chinese Financial Sector

Exterior view of the People's Bank building in Beijing, China.
[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] The People's Bank of China, the central bank of China, announced on the 6th that it will lower the bank reserve requirement ratio by 0.5 percentage points. The actual reduction will take effect from the 15th.

The People's Bank of China mentioned that approximately 1.2 trillion yuan (223 trillion won) of long-term liquidity will be supplied following the reserve requirement ratio cut.

This reserve requirement ratio cut is the first in about five months since July. At that time, the State Council of China expressed its intention to lower the reserve requirement ratio at a State Council executive meeting, and it was lowered by 0.5 percentage points two days later.

This is the first time the People's Bank of China has lowered the reserve requirement ratio in December. Initially, local media speculated that the reserve requirement ratio would be lowered in January next year.

Meanwhile, following this decision, the average reserve requirement ratio in the Chinese financial sector will decrease to 8.4%.