Top Chinese officials signaled a further cut in the amount of cash some lenders must hold in reserve as a way of pouring more liquidity into the banking system to bolster an economy hammered by the months-long coronavirus epidemic, reported Caixin.
The State Council, China’s cabinet, called for targeted easing measures and cuts in bank reserve requirement ratios (RRR) to shore up lending to small and micro businesses and reduce financing costs. Policymakers want to help companies resume operation following disruptions caused by Covid-19, according to a statement issued after a Wednesday meeting chaired by Premier Li Keqiang.
The statement fueled expectations that the central bank will follow the cabinet’s call to cut RRRs in the next few days.
For the first time, the cabinet also urged lower RRRs for joint-stock banks, a move that would encourage lending to smaller enterprises by easing joint-stock banks’ debt concerns, said Wang Yifeng, chief banking analyst at Everbright Securities.