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China central bank pledges cash support for banks before Lunar New Year

The People's Bank of China usually provides short-term liquidity support for banks to help deal with greater demand for cash ahead at that time of year.

December 29, 2017 / 12:13 PM IST

China's central bank on Friday said it will let some commercial banks temporarily keep fewer required reserves, to help them cope with heavy demand for cash ahead of the Lunar New Year.

The People's Bank of China usually provides short-term liquidity support for banks to help deal with greater demand for cash ahead at that time of year.

The move will help "promote smooth money market operations and support financial institutions' financial services before and after the Spring Festival", the central bank said.

In 2018, the first day of Lunar New Year is Feb. 16.

National commercial banks with higher cash demand will be allowed to temporarily keep fewer reserves with the central bank.

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According to the PBOC statement, some banks will be allowed to lower their reserve requirement ratios (RRR) by up to 200 basis points, for 30 days.

For major banks, the current RRR rate is 17 percent of their deposits.

The PBOC statement did not specify when the temporary arrangement to make more cash available will begin.
Reuters
first published: Dec 29, 2017 11:52 am

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