Jan 07, 2019 06:16 PM

Chart of the Day: Major Banks’ Reserve Requirement to Drop to 11-Year Low

The Chinese central bank’s latest effort to ensure liquidity will bring the reserve requirement ratio (RRR) of major banks down to the lowest level in 11 years.

The People’s Bank of China announced on Friday that it plans to cut the amount of cash that banks are required to hold in reserve, releasing a net 800 billion yuan ($116.5 billion) into the financial system ahead of the Lunar New Year holiday — a time when banks face heightened demand for cash from households and firms. The central bank said (link in Chinese) the cut was introduced to “support the real economy” and “reduce financing costs.”

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