China's central bank said on Thursday it would cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity and support the country's economic recovery, Reuters reported. The People's Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points from Sept. 15. The reduction follows a 25-bps cut for all banks in March and comes as the world's second-biggest economy is struggling to sustain a post-pandemic recovery. China's economy is facing sluggish demand, and "the RRR cut can better guide financial institutions to increase support for the real economy and boost the confidence of market players," said Wen Bin, chief economist at Minsheng Bank. The move is expected to free up over 500 billion yuan ($68.71 billion) for medium to long term liquidity, an official at the central bank was cited by state media Xinhua as saying. The central bank said that the weighted average reserve requirement ratio (RRR) for financial institutions stood at around 7.4% after the cut.
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