CCP's Central Bank Reduces Deposit Ratio to Ease Market... 

Follow us on TWITTER: http://twitter.com/cnforbiddennews Like us on FACEBOOK: http://www.facebook.com/chinaforbiddennews Following last December's cut on deposit interest rates, the Chinese Communist Party (CCP)'s Central Bank will lower its deposit reserve ratio by 0.5 percentage points st... More

Follow us on TWITTER: http://twitter.com/cnforbiddennews Like us on FACEBOOK: http://www.facebook.com/chinaforbiddennews Following last December's cut on deposit interest rates, the Chinese Communist Party (CCP)'s Central Bank will lower its deposit reserve ratio by 0.5 percentage points starting Feb. 24th, and is expected to invest 400 billion yuan of market liquidity. After this adjustment, large financial institutions and small and medium-sized financial institutions will perform 20.5% and 17.0% of the deposit reserve ratio. Some scholars believe China's reduction of bank deposit reserve ratio is not a sign of comprehensive monetary liberty, but to ease the shortage of market liquidity. People's Bank of China announced it will lower its deposit reserve ratio by 0.5 percentage points starting Feb. 24th. This cut is less than three months from the last one, and the first time the People's Bank cut deposit reserve ratio in 2012. Economist Caoan thinks the goal to lower deposit reserve ratio is to increase the flow of money. Economist Caoan: "Not long ago, the Chinese regime believed the economy is overheating, so it raised the central bank's reserve ratio. But at present, it shows a problem that China's economy is going downhill, and there are huge problems on funds. A clear manifestation is the fracture of underground funds rising, causing cash flow problems for private enterprises. At the same time, China's major real estate enterprises and other factories have shortage of funds" Caoan said that on top of that the CCP is facing a three months decline of foreign investment in China. This has resulted in the deterioration of China's economy and a substantially increased unemployment rate. For this reason the CCP took the approach of increasing the flow of money. Economist Caoan: "It's not doing it on a large magnitude. I think it (CCP) will lower the rate in the next several months, for at least half a year to ease capital control." This reduction on deposit reserve ratio will release more than 400 billion yuan of liquidity. But lowering the ratio does not mean ease of control. Heilongjiang economist Liao Cheng said that the chain reaction of the Chinese real estate bubble will lead to economic tensions. The CCP authorities certainly hope to drive the private deposit interest as low as possible, and the lending interest as high as possible, because it is a kind of monopolistic behavior. Helongjiang Economist Liao Cheng: "It (CCP) squeezes all the money to the monopolistic enterprises, the state-owned enterprises. Then it can use the money and profits to solve some urgent issues and ease its own crisis. It is unscrupulous. Whatever it does, it is to ease the financial crises caused by the real estate bubble and its corrupt image." People's University Finance and Securities Institute Director Wu Xiaoqiu suggests two reasons for the bank reserve ratio cut. One would be that the February CPI (Consumer Price Index) figures may not be optimistic; and the second that the not well-off inter-bank market fund is once again tight. And so the foreign reserve might decline in the long run. According to CCP authorities' data, the foreign exchange has declined for three months consecutively. In December 2011, the foreign reserve declined $39.8 billion. Scholars believe China's economy is facing a double pressure, that from the economic downturn and from the price hike. NTD reporters Chang Chun, Huang Rong and Bo Ni 《神韵》2011世界巡演新亮点 http://www.ShenYunPerformingArts.org/ Less

chinaforbiddennews

Added Feb 21, 2012  

Channel News

Duration 3:25   |   views 154

VIP Comments 0

Recent Comments 0

Rating:

Tags deposit  interest  rates  chinese  communist  party  (ccp)'s  central  bank  billion  yuan  market  liquidity  monetary  liberty  people's  of  china  foreign  investment  lending  economist  monopolistic  enterprises  real  estate  bubble  corrupt  image 

Permalink: