Guangzhou (JLC), September 15, 2023 – China has cut the reserve requirement ratio (RRR) – the proportion of money that lenders must keep as reserves – by 0.25 percentage points, effective on September 15 (Friday), the People's Bank of China (PBOC) announced on Thursday.
This is the second RRR cut in 2023, after the previous one in March, the PBOC said.
This cut will bring financial institutions' weighted average RRR to about 7.4%, according to the central bank. The change does not apply to those financial institutions that have already adopted a 5% RRR.
The move will release medium to long-term liquidity of over CNY500 billion (USD68.7 billion), which is expected to bring fresh momentum to the economy.
The decision is to consolidate the foundation for economic recovery and maintain reasonable and sufficient liquidity, state-run news agency Xinhua said.
It will also reduce banks' funding costs, which will facilitate their lending to the real economy, it added.
