World - Asia
Updated: November 25, 2022

Slowing Economy: China To Cut Bank Reserve Ratio

By Quadri Adejumo
November 25, 2022
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China on Friday said it would cut the amount of cash that banks must hold as reserves for the second time this year, releasing about 500 billion yuan ($69.8 billion) in long-term liquidity.

The People's Bank of China (PBOC) said it would cut the reserve requirement ratio for banks by 25 basis points (bps), effective from December 5.

That would lower the weighted average ratio for financial institutions to 7.8%, the central bank said.

It also said the cut will help keep liquidity reasonably sufficient and promote a steady fall in comprehensive financing costs while helping to stabilize the slowing economy.

The PBOC also said on Friday that it will step up the implementation of its prudent monetary policy and focus on supporting the real economy while avoiding flood-like stimulus.

The latest reduction will affect all financial institutions except those implementing a 5% reserve ratio, the central bank said.