Reserves for banks to be reviewed
By Zhang Fengming |
January 6, 2011, Thursday
|
Print Edition
Print Edition
CHINA is reportedly planning to begin a monthly review of required reserves for banks this year as the country reforms monetary policy.
Banks will face different required reserve ratios depending on the role they play in the economy, according to a report yesterday by China Securities Journal.
Banks may also earn less interest from reserves beyond the levels set by the central bank as authorities try to cut interest costs, the report said.
Hu Xiaolian, vice governor of the People's Bank of China, said last month that the central bank will make use of different reserve requirement ratios this year.
Hu added the central bank will use different monetary policy tools such as interest rates and open market operations this year.
She didn't specify how the reserve requirements would differ and whether they would be adjusted monthly or quarterly.
"Different reserve requirements should be improved to manage liquidity more efficiently," Hu said then.
The central government shifted its monetary policy from relatively loose last year to prudent for 2011.
The central bank raised reserve requirements on all banks six times and raised interest rates twice last year to reduce liquidity and increase financing costs.
The reserve requirement is now at a record high of 18.5 percent.
The one-year benchmark deposit rate has climbed to 2.75 percent while the one-year benchmark lending rate is 5.81 percent.
Banks will face different required reserve ratios depending on the role they play in the economy, according to a report yesterday by China Securities Journal.
Banks may also earn less interest from reserves beyond the levels set by the central bank as authorities try to cut interest costs, the report said.
Hu Xiaolian, vice governor of the People's Bank of China, said last month that the central bank will make use of different reserve requirement ratios this year.
Hu added the central bank will use different monetary policy tools such as interest rates and open market operations this year.
She didn't specify how the reserve requirements would differ and whether they would be adjusted monthly or quarterly.
"Different reserve requirements should be improved to manage liquidity more efficiently," Hu said then.
The central government shifted its monetary policy from relatively loose last year to prudent for 2011.
The central bank raised reserve requirements on all banks six times and raised interest rates twice last year to reduce liquidity and increase financing costs.
The reserve requirement is now at a record high of 18.5 percent.
The one-year benchmark deposit rate has climbed to 2.75 percent while the one-year benchmark lending rate is 5.81 percent.
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