Central bank raises reserve requirement

The People's Bank of China announced that it will raise the reserve requirements for banks, effective on November 26, for the ninth time in 2007, the Wall Street Journal reported. The projected raise to 13.5% from the current 13% will represent the highest reserve requirement ratio in the country since 1984. Economists expect the bank will continue to raise the reserve requirement over the next year, projecting it to reach 15% by the end of 2008. The central bank hopes that the new reserve requirement will help rein in the liquidity resulting from China's large trade surplus, which reached a new record in October.