In order to maintain a reasonable level of liquidity, promote a steady decline in comprehensive financing costs, implement a package of policies and measures to stabilize the economy, and consolidate the upward foundation for economic stability, People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 30.25 percentage points on December 5, 2022 (excluding financial institutions that have implemented a 5% deposit reserve ratio). After this reduction, the weighted average reserve ratio of financial institutions is about 7.8%.
The People's Bank of China will resolutely implement the spirit of the 20th National Congress of the Communist Party of China, increase the implementation of prudent monetary policy , focus on supporting the real economy, not flooding the market, take into account internal and external balance, better play the dual functions of the total and structural functions of the monetary policy tool , maintain a reasonable abundance of liquidity, maintain the growth rate of the money supply and the scale of social financing basically match the nominal economic growth rate, support key areas and weak links financing , and promote the effective improvement of quality and reasonable growth of quantity of the economy.
Relevant person in charge of the People's Bank of China answered reporters' questions about lowering the deposit reserve ratio of financial institutions
Question: What is the purpose of this reserve requirement cut ?
Answer: First, maintain a reasonable level of liquidity, maintain a reasonable growth in the total amount of monetary and credit, implement a package of policies and measures to stabilize the economy, increase support for the real economy, and support the effective improvement of economic quality and reasonable growth of quantity. The second is to optimize the fund structure of financial institutions, increase the long-term stable fund source of financial institutions, enhance the fund allocation capabilities of financial institutions, and support industries and small and medium-sized enterprises seriously affected by the epidemic. Third, the reduction of the reserve requirement ratio reduces the annual capital costs of financial institutions by about 5.6 billion yuan. Through transmission through financial institutions, it can promote the reduction of the comprehensive financing costs of the real economy.
Question: How much funds will be released this time of reserve requirement ratio cut?
Answer: This reduction in reserve requirement ratio has released a total of about 500 billion yuan in long-term funds. This reduction in the reserve requirement ratio is a comprehensive reduction. Except for some legal person financial institutions that have implemented a 5% deposit reserve ratio, the reserve requirement ratio has been generally lowered by 0.25 percentage points for other financial institutions.
Source丨People's Bank of China
Edit丨Wu Zebin
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