China Unveils More Flexible Reserve Requirement Rules

3gzylon 2015-09-12

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(Xinhua) 09:38, September 12, 2015

The file photo shows the headquarters of People's Bank of China in Beijing. [Photo: Chinadaily]

China's central bank announced on Friday that it will change its reserve requirement rules, replacing the current daily assessment of bank reserves with an averaged approach.

Since 1998, the People's Bank of China or PBOC has required commercial banks to meet the reserve requirement ratio on a daily basis, or to make sure they put aside more deposits as reserves than required.

Starting from Sept. 15, the reserves of commercial banks will be regulated on an average basis during an assessment period, but there will be a minimum daily amount of reserves.

The reserve ratio of commercial banks will be allowed to be less than 1 percent lower than the compulsory ratio set by the central bank by the end of each business day.

The PBOC said the reform will help commercial banks ensure both efficiency in their capital use and a safe liquidity level.

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