PBOC's Targeted RRR Cuts Could Release USD150 Billion in Liquidity, Investment Bank Says
Dou Shicong
/SOURCE : Yicai
PBOC's Targeted RRR Cuts Could Release USD150 Billion in Liquidity, Investment Bank Says

(Yicai Global) Oct. 9 -- Major investment bank China International Capital Corporation (CICC) [HKG:3908] expects the People's Bank of China's targeted cuts in the reserve requirement ratio (RRR) to result in the release of CNY800 billion to CNY1 trillion (USD120 to USD150 billion) in liquidity next year, online financial news outlet Cailian Press reported today.

CICC expects the cut to cover depository institutions making up more than 95 percent of assets related to the country's banking industry.

Although it will be extremely difficult for the People's Bank of China, the country's state bank, to cut the RRR again quickly in succession, the corporation suggests there is still the possibility for another cut in the mid-term.

The central bank decided on Sept. 30 that qualified commercial banks will be allowed to reduce the reserve requirement ratio by 0.5 to 1 percent based on the basic reserve requirement ratio starting from next year in order to support the development of inclusive financing.

The move represents China's second RRR cut, 18 months after the first one on March 1, 2016.

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Keywords: RRR , China International Capital Corporation , Pboc , Monetary Policy , Central Bank