Bank of China adds 900 billion yuan of liquidity
The economic entity of the Asian country announced through a statement the reduction of 50 basis points the ratio of mandatory banks reserves
The People’s Bank of China, the central bank of the Asian giant, has decided to inject 900 billion yuan of liquidity into the country’s economy, as announced in a statement Friday.
To Achieve this, the monetary authority will reduce the ratio of mandatory reserves of the banks by 50 basis points, which are the minimum deposits that all entities must keep in the central bank accounts.
The reduction of the rate, which will be effective from September 16, mostly affects banks, since it excludes funds, insurers and companies that are dedicated to making loans to other companies or to finance car purchases.
For banks that operate mostly in rural areas, the reduction in the ratio will be up to 100 basis points. In such case, it will begin to be effective in two phases: the first one on October 15 and the second one on November 15.
The central bank of China has calculated that this decision will reduce the capital costs of the entities by 15,000 million yuan a year and has stressed that this movement is not a change in the monetary policy strategy of the agency.
K. Tovar
Source: ABC.es
