The People’s Bank of China reduced required reserve rates

The People’s Bank of China (PBoC) reduced the reserve ratios required of banks and credit institutions.

In the statement from the Central Bank of China it was indicated that the required reserve ratio will be reduced by 25 basis points starting September 15.

The statement states that the decision “aims to strengthen the foundations of economic recovery and provide sufficient liquidity to the market.”

Following the decision, the weighted average required reserve ratios applied to financial institutions will fall to 7.4 percent.

The decision, aimed at providing more liquidity to the market and easing the credit market, is estimated to free up approximately 500 billion yuan (about $68.7 billion) of cash assets.

The last time China’s central bank cut reserve requirement rates by 25 basis points was on March 17.

The bank announced on September 1 that the foreign currency deposit rate that banks and financial institutions must hold as reserves would be reduced from 6 percent to 4 percent effective September 15.