BEIJING: China's central bank said on Friday (March 13) it would cut the reserve requirements for banks, releasing some 550 billion yuan (US$79bil) in liquidity as the country fights to control the economic fallout of the Covid-19 (coronavirus) outbreak.
The People's Bank of China said in a statement that it would cut the reserve requirement ratio on March 16 by 50 to 100 basis points for banks that meet its assessment criteria, reducing the amount of cash they must hold.
The central bank's moves come a day after China's State Council released a statement saying Premier Li Keqiang called for targeted RRR cuts soon, to support bank lending to small- and medium-sized enterprises. Nomura chief China economist Lu Ting said in a report on Thursday that"cutting RRR is the best way for cutting actual bank lending rates as RRR cuts could increase supply of funds".
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