China: People’s Bank of China Announces Reduction in Bank Reserve Requirement Ratio

In light of the continued recovery of China’s economy, the sustained strengthening of internal economic forces, and improving social expectations, the People’s Bank of China has decided to reduce the reserve requirement ratio for financial institutions by 0.25 percentage points, effective from September 15, 2023. This reduction excludes financial institutions that have already maintained a 5% reserve requirement ratio. Following this adjustment, the weighted average reserve requirement ratio for financial institutions will be approximately 7.4%.

The People’s Bank of China has consistently adhered to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. It remains resolute in implementing the spirit of the 19th National Congress of the Communist Party of China and the decisions of the Central Economic Work Conference. The bank is committed to implementing a prudent monetary policy, maintaining reasonable liquidity, ensuring reasonable credit growth, and matching the growth rates of the money supply and social financing with nominal economic growth. This approach aims to better support key areas and weak links, maintain both domestic and international balances, stabilize the exchange rate, and provide solid support for the sustained recovery and improvement of the real economy. These measures are expected to facilitate qualitative and sustainable economic growth.

The reduction in the reserve requirement ratio is part of China’s ongoing efforts to support economic recovery and ensure stable economic growth.