China broadened the base of reserves it requires commercial lenders to deposit with the central bank to control liquidity and limit inflation, economists said.
Reserve requirements are being extended to customers’ margin deposits, a move that may drain 900 billion yuan ($140 billion) from the banking system over six months, Bank of America Merrill Lynch economist Lu Ting said in an e-mailed note on Aug. 26. Mizuho Securities Asia Ltd. cited similar information. A central bank press official declined to comment.
China has already raised reserve ratios to a record 21.5 percent for the biggest banks to counter the fastest inflation since 2008. London-based Capital Economics Ltd. said that the reported move may mean no further increases this year, after previously anticipating another 1 percentage point gain by the end of December.
“It’s not surprising to see such a move from the Chinese government, as it is facing a big trade surplus and inflation pressure,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking group Ltd. “The move will further tighten liquidity,’” he said.
About Me
- Marc A. Ross
- Washington, DC, United States
- Marc has an extensive background in business development for companies as well as directing the advocacy operations, communications efforts, fundraising programs and public affairs for nonprofits, corporations and political campaigns for the highest offices in the United States and the United Kingdom. Marc is available for consulting, workshops, panels, interviews, training sessions, advice, commentary and speaking on all things Advocacy 2.0. Marc can be reached via email by sending a note to marc (at) 2ndsix.com or by twitter at @microadvocacy.
