Decreasedtheexcessreserveratioforthefirsttimein12years”Usemoneywhereitisneededmost”
Afternearlyaweekofsupervised“spoilers”severaltimes,thethirdconsecutiveyear’sannouncementoftheRRRcutonApril3cameasscheduled,buttheexcessreserveratiowasloweredforthefirsttimein12yearsbutitwas“seeingforalongtime”.Initiallyannouncedthatfortheruralcreditcooperatives,ruralcommercialbanks,ruralcooperativebanks,villagebanksandurbancommercialbanksoperatingonlyinprovincialadministrativeareas,thedepositreserveratiowillbeloweredby1onApril15andMay15.Implementedinplacetwice,eachtimedownto0.Fiveaverages,releasingatotalofabout400billionyuaninlong-termfunds.Atthesametime,itwasdecidedtoreducetheinterestrateoftheconsolidatedexcessdepositreserveoffinancialinstitutionsfrom0onApril7.72%downto0.35%,theinterestratehasbeenzerosince2008.99%downto0.After72%,noadjustmenthasbeenmade.ItisnotsurprisingthatthetargetedRRRcutscame,buttheexcessreserveratiowasloweredforthefirsttimein12years,butitwas”seeingforalongtime.”LianpingtoldthesaunaandYewangthattheexcessdepositreserveisarequirementforcommercialbankstopaystatutorydepositreserveinaccordancewiththecontinuousrequirements.Ifthefundsareample,theycanalsobeplacedinreplacementandpayinterest.”Thistimetheemerginginterestrateofexcessdepositreservewillbereducedfrom0.72%downto0.The35%rangeisnotsmall,basicallyveryclear,thatis,ifyouwantcommercialbankstohaveamplefunds,don’tplacethem,butmorecanplayaroleinsupportingtherealeconomy,suchascreditandinvestmentbonds.”LianPingsaid.ZongLiangalsobelievesthatthetransitionistoallowfinancialinstitutionstousetheirmoneywhereitismostneeded,ratherthandepositingitgradually.ThereductionoftheexcessreserveratioandthetargetedRRRcutsareunifiedandcoordinated,sothatfinancialinstitutions’fundscanbemorecompactandflowmoreintotherealeconomy,providingbettersupportforthedevelopmentoftherealeconomy.Thisrareoperationalsocarriesmoresignals.LianPingsaidthatthereductionoftheexcessreserveratioalsoreflectsthepositiveeffectoftheworldeconomicrecessiononthechangesoftheChineseeconomy.Itisabsolutelynecessaryformacropoliciestoincreasethecodefromallangles,andmacropolicyadjustmenteffortshavebeensignificantlyincreased.”Monetaryauthoritiescanbesaidtobeusingvariousmeanstopromotecommercialbankstomakebetteruseoffinancialresourcestosupporttherealeconomy,especiallytofurtherpromotetherecoveryoftherealeconomy’sdemandandrecovery.””LianPingsaid.