PBOC Eases Bank Capital Rule To Boost Lending

Forex News

Chinese government intends to take another step to ease the pressure from its deleveraging campaign. Some Chinese banks have received notice from regulators that a specific capital requirement will be eased in order to support lending, as the authorities try to mitigate increasing risks to the economy from the trade war.

The People's Bank of China (PBOC) said that the so-called "structural parameter" in the Macro-Prudential Assessment of their balance sheets will be lowered by around 0.5 points, reducing required capital buffers. According to the some sources, this move is aimed to support local financial institutions in meeting credit demand effectively.

According to some analysts, the PBOC’s reduction could significantly relieve the regulatory pressure and encourage bank lending. Also, more easing policies can be expected in the future if existing measures don’t yield the desired effects.

Earlier, the China’s central bank cut reserve-requirement ratios (RRR) in order to strengthen financial sector.