China is cutting the amount of reserves the country’s banks are required to keep on deposit at the central bank, freeing up more than $100bn to help cushion a slowing economy and the impact of a potential trade war with the US.
The People’s Bank of China announced in a statement on Sunday that it would reduce the reserve requirement ratio for large commercial banks by half a percentage point, giving them an additional Rmb500bn ($77bn) to deploy. Reserve cuts for smaller banks are expected to free up an additional Rmb200bn.
While China’s central bank did not mention the looming trade war with the country’s largest trading partner, the cuts are scheduled to take effect on July 5.
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