Banking News
- Central bank may up required reserves more
Date: 9-Mar-2007 Sources: (Shenzhen Daily)
THE government has scope to further increase banks' required reserves to mop up excess liquidity in the banking system, Wu Xiaoling, deputy governor of the People's Bank of China, said Thursday.
The central bank has raised banks' required reserves five times since last June to brake credit growth and to soak up excess liquidity generated by China's bulging balance-of-payments surplus. Banks must now tie up 10 percent of their deposits in reserves at the central bank. Economists expect the ratio to rise to 11 percent or 12 percent by the end of the year as cash spun off from China's trade surplus, which hit a record US$177.47 billion in 2006, continues to flood into the banking system.
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