China's central bank has granted permission for its five largest banks to lower the amount of reserve capital they must hold for a temporary period as pressure builds in the Chinese financial system in the run up to the Lunar New Year. The move comes after China announced plans last week to allow some state-owned lenders and insurance companies to raise funds from overseas investors by selling shares or issuing bonds. The bank has pushed liquidity into the markets this week to avoid a potential cash flow issue as the largest holiday of the year approaches.
China's central bank has granted permission for its five largest banks to lower the amount of reserve capital they must hold for a temporary period as pressure builds in the Chinese financial system in the run up to the Lunar New Year. The People’s Bank of China has reduced the reserve requirement ratio one percentage point to 16%. The bank has pushed liquidity into the markets this week to avoid a potential cash flow issue as the largest holiday of the year approaches.