A front-page opinion piece in the China Securities Journal (headline via Bloomberg) says that China should cut banks’ reserve requirement ratio (RRR – its the level of cash that commercial banks must keep at the central bank) to match growth.
On Friday the China Banking Regulatory Commission made comments regarding the RRR (amongst other monetary policy tools), here, adding to recent previous reports from China on the use of the RRR here and here
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Added – more detail on today’s headline, via MNI:
- A system-wide cut in banks deposit reserve ratio is a good policy option
- Because of shrinking capital inflows
- The China Securities Journal said relending should be the major tool for fine-tuning policy but a reserve cut can boost the money multiplier
- Noted a shortfall of CNY1.6 trillion in base money this year given the 13% M2 growth target
