I’m in catch-up mode this morning, so a bit slow with this …
From Shanghai Securities News (via MNI), reporting on comments from Ma Jun, the chief economist of the People’s Bank of China’s research bureau.
PBOC cut to the required deposit reserve ratio was due to:
- Replace system funding lost via the capital account
- Need to provide liquidity ahead of the Chinese New Year
- As well as the economic slowdown
- But added that addressing the longer-term interbank liquidity picture was the main concern
- “Because the PBOC has basically stopped its regular interventions in the foreign exchange market, foreign exchange is no longer a source of long-term liquidity so you must use other channels and tools to deliver liquidity”
- “Using the reserve requirement and other monetary tools is needed to increase the money multiplier, to maintain the reasonable growth of broad money and a moderate level of liquidity and lending and to guarantee the stable growth of total social financing”
