China Banks Pressure PBOC on Reserve Requirements

China’s biggest banks are pushing the central bank to allow them to lend more by lowering the required reserves that they must set aside on deposits, the Wall Street Journal reported, citing people familiar with the talks.

A cut is inevitable after talks with the central bank, the newspaper reported, citing an unidentified executive at one of the nation’s four largest lenders. A decline in deposits is forcing banks to curb lending or look for more expensive financing. Lenders’ funding costs may be pushed higher as a planned deposit-insurance system would lead to more competition among them for savings, the newspaper said.

A call and a fax to the central bank after normal business hours were unanswered.  China’s biggest banks are currently required to keep 20 percent of their deposits as reserve requirement. They are allowed to lend a maximum of 75 percent of their deposits.

Bloomberg

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