Chinanews, Beijing, Feb. 25 – Starting from Sunday, People's Bank of China, the central bank of this country, begins to raise the bank deposit reserve ratio by a margin¹ of 0.5 percentage point, bringing the bank deposit reserve ratio for all state-owned commercial banks and joint-stock commercial banks up to 10%.

This is the second time for the central bank to raise the bank deposit reserve ratio so far this year. Earlier on January 15, the central bank raised the bank deposit reserve ratio by the same margin of 0.5 percentage point.

Since the latest consumer price index was still high, there were rumours² going around that the central bank might raise the interest rate to tighten³ the money supply. It seems now that raising the bank deposit reserve ratio might be a more moderate means to control the macroeconomy and it will continue to be the main tool for the central bank to control the macroeconomy this year.

The central bank claims that since 2006, it has applied⁴ multiple means to alleviate⁵ the excessive liquidity⁶ problem in the banking⁷ system. Although these means have achieved some results, trade surplus is still high and there is mounting pressure for loan release. In light of the changing situation in liquidity, the central bank has to raise the bank deposit reserve ratio again.

The central bank says that it will continue to implement⁸ a prudent⁹ monetary¹⁰ policy, properly manage liquidity in the banking system and make loan release grow more rationally, so that national economy can develop in a fast and sound track.