Mike had the news over the weekend: China says it cuts RRR for some banks effective 2018
A couple of recaps/more detail now.
This via Bloomberg: China Steers Credit to Small Business With Targeted Reserve Cut
- Could unleash upwards of 600 billion yuan ($90 billion) for new lending
- Targeted reserve requirement ratio cut is also a signal policy makers don't want to ease monetary policy across the board
- PBOC is attempting to push funds to specific places via incentives for commercial lenders
- "The latest move is striking for the advance notice it gives the banks -- apparently aimed at encouraging lending to small and medium-sized enterprises ahead of the year-end so they can clear the threshold for lower reserve requirements, " Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a report. "The timing should help buoy market confidence in the leadership change."
And note this from the Bloomberg report ... the RRR cut could well be much more important and widespread than a simple 'its just a small targeted cut' presentation ... bolding mine:
- The measures apply to all major banks
- 90 percent of city commercial banks
- 95 percent of rural commercial lenders
This too, via Reuters: China makes targeted reserve requirement rate cut to boost lending to small firms
- "The size of the cut is big, it covers all big banks, and 90 percent of small and mid-sized banks. Conservatively we estimate 700 billion yuan in liquidity could be freed up," analysts at Lianxun Securities said in a note.
