China unveils more flexible reserve requirement rules

China's central bank announced Friday to change its reserve requirement rules, replacing the current daily assessment of bank reserves with an averaged approach.

Since 1998, the People's Bank of China (PBOC) has required commercial banks to meet the reserve requirement ratio on a daily basis, or to make sure they put aside more deposits as reserves than required.

Starting from Sept. 15, the reserves of commercial banks will be regulated on an average basis during an assessed period, but there will be a minimum daily amount of reserves, the central bank said in an online statement.

By the end of each business day, the reserve ratio of commercial banks will be allowed to be less than 1 percent lower than the compulsory ratio set by the central bank.

The reform will help commercial banks ensure both efficiency in their capital use and a safe liquidity level, the PBOC said. Endi