China’s central bank announced on Jan 18 it is raising the reserve requirement ratio (RRR) for yuan deposits placed in the country by overseas financial institutions to the normal level beginning Jan 25.
The People’s Bank of China (PBOC) began to include these types of yuan deposits into its reserve requirement system since December 2014 and set the ratio at zero for the time being.
Overseas financial institutions do not include central banks and other similar agencies, such as official reserve managements, international financial organizations, and sovereign wealth funds.
The central bank said the move is aimed at improving the country’s deposit reserve system and will not affect the liquidity of the onshore yuan market.
Multiple monetary tools will be adopted to further ensure reasonably adequate liquidity in the banking system, said the bank.