China Cuts Reserve Requirement Ratio
2018年6月25日 - 12:55PM
RTTF2
China's central bank on Sunday lowered the reserve requirement
of some lenders to free up as much as CNY700 billion or $108
billion funds to provide liquidity support for small businesses
struggling with debt.
The People's Bank of China said in a statement that it will
reduce the ratio of cash that banks should retain as reserves by 50
basis points. This is the third reduction in the ratio this year
and the biggest of them.
The cut in RRR will support qualified debt-to-equity swap
programs targeted at firms burdened with debt. The decision will
take effect on July 5.
The bank had earlier lowered the RRR last April.
The latest RRR cut comes as China's trade war with the US
escalates with both sides threatening more tariffs on imports.
The RRR reduction was also widely expected after the executive
meeting of State Council held on June 20 recommended such an
action. The council said targeted reduction will boost finance to
small and micro enterprises.
The PBoC said it will continue to implement a stable and neutral
monetary policy to create a suitable monetary and financial
environment for high-quality development and supply-side structural
reforms.
Julian Evans-Pritchard, an economist at Capital Economics, noted
that unsurprisingly, growing evidence of a shift in monetary policy
is being linked by many to concerns about the impact of a US
tariffs on China's economy.
But the bigger threat to China's economy has always been the
delayed impact of last year's policy tightening, the economist
added.
The RRR cut does seem likely to result in looser monetary
conditions given signs that policymakers are becoming more
concerned about the downside risks to economic activity from
slowing credit growth, Evans-Pritchard said.
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