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The People’s Bank of China (PBoC) reduced the reserve requirement ratio (“RRR”) for Chinese commercial banks by 0.5 percentage point on July 9; the RRR cut allows commercial banks to turn more of their customers’ deposits into loans rather than holding them at the central bank as reserves. The PBoC estimates that the RRR cut will increase banks’ lending capacity by ¥1 trillion yuan, about 1% of China’s $16.4 trillion U.S. dollar GDP. The cut came after aggregate financing to nonfinancial borrowers grew 11.0% in year- ago terms in June, matching May for the slowest growth since the pre-pandemic period.Subscribe to Comments