PBOC to Cut Banks’ Reserve Requirement Ratio to Support Economy

China’s central bank announced it will cut the amount of cash lenders need to keep in reserve, injecting about 500 billion yuan ($70 billion) into the financial system to keep liquidity ample and support sectors and small companies “severely impacted” by the Covid-19 pandemic.

The People’s Bank of China (PBOC) will lower financial institutions’ reserve requirement ratio (RRR) by 25 basis points on Dec. 5, according to a statement on its website Friday. The weighted average RRR of financial institutions will fall to around 7.8%. It is the second reduction this year — in April the ratio was also cut by 25 basis points, releasing around 530 billion yuan of liquidity into the financial system.