China to raise RDRR to curb overheated growth of bank credit
( 2003-08-24 08:36) (Xinhua)
The People's Bank of China (PBC), China's central bank, announced here Saturday that it would raise the rate of required deposit reserves (RRDR) from six percent to seven percent on Sept. 21 this year.
The central bank specified that the rate readjustment would apply to China's state-owned commercial banks, stockholding commercial banks, urban commercial banks, rural commercial banks, China Agricultural Development Bank, trust and investment companies, and other financial institutions, including foreign- invested ones.
Urban and rural credit cooperatives are excluded from the RDRR readjustment, the central bank said.
A PBC spokesman said the central bank expected that the raising of the RDRR would help curb the overheated growth of monetary credit and safeguard the sustained and healthy development of China's national economy.
According to the PBC, China currently has deposit reserves worth 1.6 trillion yuan (about 0.2 trillion US dollars) in various financial institutions.
The PBC spokesman predicted that the one-percentage-point raise of the RRDR would freeze 150 billion yuan-worth of deposits within those institutions.
It is a soft monetary policy adjustment, and will not lead to an overall decrease of monetary credit, the spokesman stressed.
China established the system of required deposit reserves in 1983. It has lowered the RDRR rate twice previously -- in 1998 and 1999.
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