China’s real estate market is in crisis, companies and regional governments are heavily indebted. Now the central bank is reacting and releasing funds that banks can lend to the economy as loans.
The Chinese central bank is loosening its monetary policy to help the weakening economy. To this end, the minimum reserve ratio that banks must hold at the central bank will be reduced by 0.5 percentage points. The move will come into force on February 5, senior central banker Pan Gongsheng told reporters in Beijing. It is the first reduction in the rate since last September.
The move frees up funds that banks can in turn lend to the economy as loans. Pan estimated the total amount at one trillion yuan (around 130 billion euros). China’s economy has long been suffering from a variety of problems, including the struggling real estate market and high levels of debt among companies and regional governments.
Source: Stern
