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China's central bank shifts policy stance

China central bank
Asia   Another 200bn yuan were expected to be released

China's central bank cut the amount of reserves that the country's lenders are forced to keep on reserve, in a move that some saw as a shift towards an easing bias in its policy which ultimately would weaken the currency.


At the weekend, the People's Bank of China reduced its required reserve ratio for almost all banks by 0.50 percentage points, setting it at 15.5% for the largest lenders, effective from 5 July.

In a statement, the monetary authority said the move would release 500bn yuan for debt-to-equity swaps at the five largest banks and 12 joint-stock banks, in a move meant to help clean-up the banking system.

Another 200bn yuan were expected to be released for a group of smaller lenders, so that they could support lending to small and medium-sized enterprises.

 

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