OREANDA-NEWS. May 07, 2014. The PBC has been actively and vigorously using monetary policy tools to support adjustment of the economic structure, especially to encourage and guide financial institutions to use a larger share of new loans and revitalized stock of credit asset to support the agricultural sector, rural areas, farmers, and etc. In order to implement the guidance of the State Council’s Executive

Meeting and the speech of Vice Premier Ma Kai at the teleconference on stepping up rural financial services, improve financial services to the agricultural sector, rural areas and farmers, broaden fund sources, encourage more credit support to the agro-linked sectors, and bolster financial services in the rural areas, the PBC has decided to cut the reserve requirement ratios for county-level rural commercial banks and county-level rural cooperative banks by 200 and 50 basis points respectively.

Compared with rural commercial banks and rural cooperative banks incorporated in urban areas, rural commercial banks and rural cooperative banks incorporated at the county-level have higher proportions of agro-linked loans and rendered more credit support to the agricultural sector. The cut in reserve requirement ratios targeting county-level rural financial institutions will help improve their financial strength and capacity to support the agricultural sector, rural areas and farmers.

The move will incentivize more credit resources to flow to agricultural sector and real economy at the county level, and support key areas and weak links in the economy. Against the backdrop of implementing a sound monetary policy, this latest move will not affect the overall liquidity in the banking system, and it is consistent with the principle of stabilizing the aggregate amount of credit, revitalizing the stock of credit, and optimizing the credit structure. Going forward, the PBC will continue the sound monetary policy, keep liquidity in the banking system at appropriate volumes, and maintain the proper growth of money, credit and all-system financing aggregates. Moreover, the PBC will continue to make use of innovative monetary policy tools and optimize the credit and financing structure, so as to promote adjustment of the economic structure.