Banking News
- Central bank raises required reserves
Date: 8-Jan-2007 Sources: (Shenzhen Daily)
THE government raised the amount of funds which lenders must hold in reserve for the fourth time since mid-June last year in its latest attempt to mop up excess liquidity derived from its massive balance of payments surplus.
The People's Bank of China said on its Web site Friday that banks would need to increase their required reserves by half a percentage point, effective from Jan. 15.
'This is because of China's continued balance of payments surpluses, fresh growth in already excessive liquidity in the banking system, and relatively high pressure for more lending,'it said in a statement.
While recent tightening moves had triggered some easing in credit growth in recent months, the central bank said challenges remained in trying to bring the economy to a more sustainable footing.
The central bank announced similar moves Nov. 3, July 21 and June 16 last year.
The increase takes the reserve requirement to 9.5 percent for big State banks and joint-stock banks and to 10 percent for smaller banks, including urban credit cooperatives.
Analysts said they were not surprised by the tightening measure, the latest in a long-running campaign to cool a rapidly-growing economy that has also involved raising benchmark interest rates twice since April 2006.
Banks extended 2.97 trillion yuan (US$380.5 billion) in new loans in the first 11 months of 2006, exceeding the central bank's full-year target of 2.5 trillion yuan.
Sponsor Results:
