The People’s Bank of China plans to ease one of its capital requirements for banks in a further attempt to encourage lending, sources told Bloomberg.
In a notice sent to several banks on Wednesday, the central bank said that the so-called “structural parameter” in the Macro-Prudential Assessment of balance sheets will be eased by 0.5%, freeing capital for lending purposes, according to the unnamed sources.
The move, yet to be made public, would follow a string of measures recently brought in by Beijing to help support the economy amid rising threats of an impending slowdown and trade war with the US, including proposed tax cuts and a $74 billion stimulus package. The sources added that the bank considers the capital-buffer reduction as a counter-cyclical adjustment reaction to the growing trade uncertainty.