The People's Bank of China has announced that it will cut the cash amount required to be reserved in commercial banks by 50 basis points starting July 5.
The amount to be released by cutting the reserve requirement ratio at the five largest state-run banks, and 12 commercial banks, could reach up to 500 billion yuan.
This money is earmarked "to support qualified debt-to-equity swap projects, and to leverage the same amount of private capital participating in the investment".
Another 200 billion yuan, which is to be freed from postal savings banks, city and non-county rural commercial banks, and foreign banks, will be lent to small and micro enterprises to lower their financing costs.
The central bank also made a cut to the benchmark reserve ratio in April, when the rate was lowered by 1 percent point to help small businesses and to improve overall stability and liquidity in the economy.
For more on this, CRI's Shane Bigham spoke earlier with Mike Bastin, Principal Consultant at Business Development International.
