Friday, January 14, 2011

China Raises Big Bank Reserve Requirements to 19%

China hikes reserve requirements again
The central bank raised the level of reserves that banks are required to hold by one half of a percentage point. Chinese major banks will have to set aside 19% of their reserves and small and medium banks will have to keep 15.5% of their deposits as reserves, a record high for the country's deposit-taking institutions, the Chinese government said.

For comparison the reserve requirement in
Brazil is 15%
U.S. is 10%
India is 6%
Canada and Australia are 0% or N/A (As Jesse points out below, it's not REALLY zero. Not Applicable might be a better label.)


jesse said...

Love the blog. Note having reserve requirements of zero is a bit misleading. Canada has capital reserve requirements which act as de facto reserve requirements.

China is trying like anything to rein in debt. They are in many ways "pushing on a string" because their money velocity is very high. That is, money passes hands many times before it gets back to a bank. (At least that's how I understand it...)

GG said...

Thanks. And, yes, you are correct.