China’s Monetary Sterilization
Not long after the US Federal Reserve announced its second round of “quantitative easing, China’s central bank announced another two large increases in the required reserve ratio for bank deposits. How much more of this monetary tightening can China's commercial banks take?
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BEIJING – Not long after the United States Federal Reserve Board announced its second round of “quantitative easing” (known as QE2), the People’s Bank of China (PBC), China’s central bank, announced two increases of 0.5 percentage points in the required reserve ratio (RRR) of bank deposits. The RRR now stands at 18.5%, a historic high, even in global terms.