The People's Bank of China cuts its RRR by 0.5%, releasing 1.2 trillion yuan in long-term funds

The People's Bank of China decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15, 2021 (excluding financial institutions that have implemented a 5% deposit reserve ratio). After this reduction, the weighted average deposit reserve ratio of financial institutions was 8.4%. The People's Bank of China will continue to implement a prudent monetary policy and will not engage in money flooding. The RRR cut has reduced the capital cost of financial institutions by approximately 15 billion yuan per year. In this way, the RRR cut has released a total of about 1.2 trillion yuan in long-term funds.