China Slashes RRR As Economy Teeters

China Slashes RRR As Economy Teeters

Just one business day after Premier Li Keqiang tipped incremental policy easing aimed at bolstering smaller firms, the PBoC pulled the trigger. China cut the reserve requirement ratio for most banks by 50bps, effective December 15. The last cut was in July. Typically, the market doesn't have to wait long for a move following official nods to freeing up liquidity in a bid to lower financing costs. July's move came just two days after the State Council telegraphed action. I should note that the
Subscribe or log in to read the rest of this content.

One thought on “China Slashes RRR As Economy Teeters

  1. One thing that intrigues me. In China, if nowhere else, couldn’t the government intervene directly on the economic actors to force their leverage ratio to a “sustainable”/prudent level (whatever you deem that level to be, per industry, given historical volatility of economic conditions in that industry)?

    In the free world, such direct interventions are usually frown upon and authorities are forced to either wait for “bailout” conditions and/or use less than perfect tools such as prudential ratios etc. with plenty of significant actors avoiding such regulations…

    … but I have the naiveté of thinking that, should we be able to do so, the Fed/the authorities could impose ‘proper’ leverage on actors as, partly, a better way of managing liquidity than having to rely on interest rates and bond buying programs.

Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.

NEWSROOM crewneck & prints