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China says will further relax reserve requirements "as appropriate"
June 6, 2014 / 7:30 AM / in 4 years

China says will further relax reserve requirements "as appropriate"

BEIJING, June 6 (Reuters) - China will further cut the reserve requirement ratio (RRR) for some banks when appropriate, the bank regulator said on Friday, just a week after the government lowered the RRR for the second time in two months to bolster economic growth.

The RRR, or the level of cash that commercial banks must keep at the central bank, will be reduced for banks whose loans to small businesses and the farm sector meet certain requirements, the bank regulator said.

It did not say when the reduction would be made, nor did it detail the criteria that would be used to judge whether banks are eligible for less stringent reserve requirements.

“For banks and financial institutions where loan support for small businesses and the farm sector meet a definite standard, the RRR will be lowered as appropriate,” the regulator said.

The remarks were made in a statement from the bank regulator about what it would do in future to extend more financial services to China’s real economy.

Hit by unsteady global demand and slowing domestic investment, China’s stuttering economy grew at its slackest pace in 18 months between January and March.

That has alarmed some experts who worry the slowdown may be exacerbated by a cooling real estate market, thereby threatening social stability by causing unemployment to spike.

Some investors speculate that China’s authorities would further loosen policy to shore up growth, such as reducing the RRR across the board for all banks.

But policymakers have so far signalled that they are not prepared to make any big policy moves, and have opted instead for smaller measures that only stimulate activity in some parts of the economy.

Reporting by Koh Gui Qing and Shen Yan; Editing by Kim Coghill

Our Standards:The Thomson Reuters Trust Principles.
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