China hikes reserve ratio to cool economy
Afp, Beijing
China's central bank on Friday ordered major commercial banks to set aside more money as reserves in an effort to slow lending growth and to cool its break-neck economic growth. The People's Bank of China said the required deposit reserve ratio for commercial lenders would rise 0.5 percentage points to eight percent from July 5. "This rise in required deposit reserve ratio is to prevent credit from growing too fast and to provide a stable currency and financial environment for the country's sustainable and healthy development," the central bank said in a statement on its website. "Currently, fixed asset investment is growing too quickly, money supply is growing too fast," it added. The latest move would freeze 150 billion yuan (18.75 billion dollars) in inter-bank liquidity, the central bank said. The announcement was made just two days after China's cabinet and central bank called for more curbs on fixed-asset investment and lending and urged a more balanced model of growth.
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