China to cut RRR by 50 basis points

The People's Bank of China (PBOC) announced on Wednesday it would cut the reserve requirement ratio (RRR) by 50 basis points for all banks, starting January 6, to support the development of the real economy.

The move aims at cutting the amount of cash that banks must hold as reserves and will release around 800 billion yuan (114.91 billion U.S. dollars) in liquidity, said China's central bank.

According to the PBOC, the cut does not apply to finance companies, financial lease companies and automobile finance companies.

This will reduce the capital cost of banks by approximately 15 billion yuan per year, stabilizing the total liquidity of the banking system, said the PBOC.

The PBOC lowered RRR thrice in 2019. The most recent one was on September 16 when the central bank released a total of 900 billion yuan in liquidity.

(CGTN)