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11 Sep 2015
PBOC alters RRR calculation
FXStreet (Mumbai) - Starting September 15, the People's Bank of China (PBOC) will change the way it calculates the reserve requirement ratio (RRR), the central bank announced on Friday.
The PBOC will now be using averaging to calculate the RRR. The new regulation will allow liquidity reserves in the banks to temporarily fall below the official requirement.
The central bank stressed that the reform will not affect the current liquidity situation as there is ample liquidity in the Chinese banking system.
The bank further added that the new method could release liquidity in some situations and add liquidity when it lacked.
The PBOC will now be using averaging to calculate the RRR. The new regulation will allow liquidity reserves in the banks to temporarily fall below the official requirement.
The central bank stressed that the reform will not affect the current liquidity situation as there is ample liquidity in the Chinese banking system.
The bank further added that the new method could release liquidity in some situations and add liquidity when it lacked.