China unveils more flexible reserve requirement rules

Beijing, Sep 12 (IANS) China’s central bank says it will change its reserve requirement rules, replacing the current daily assessment with an averaged approach, the media reported on Saturday.

Since 1998, the People’s Bank of China (PBOC) has required commercial banks to meet the reserve requirement ratio on a daily basis or to make sure they put aside more deposits as reserves than required, the People’s Daily reported.

Starting from September 15, the reserves of commercial banks will be regulated on an average basis during an assessment period, but there will be a minimum daily amount of reserves.

The reserve ratio of commercial banks will be allowed to be less than 1 percent lower than the compulsory ratio set by the central bank by the end of each business day.

The PBOC said the reform will help commercial banks ensure both efficiency in their capital use and a safe liquidity level.

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