China's prudent and neutral monetary....>

CHINA PRESS: China's prudent and neutral monetary policy needs to be fully

implemented and cutting banks' reserve requirement ratios could be an option for

that policy, the 21st Century Business Herald said Thursday. This year's

monetary policy actually is leaning looser than last year, with new loans

reaching CNY8.8 trillion in the first seven months, CNY798.1 billion more than

in the same period last year. Increasing capital demand and the strong desire of

financial institutions to expand are causing monetary policy to loosen,

hindering the goal of neutral policy. Therefore, the monetary policy framework

needs to be reformed to slow down the growth in the scale of financing and

improve financial institutions' investment structures, the newspaper argued. A

reduction in the reserve requirement ratio could facilitate such a reform, it

added, allowing financial institutions to have more excess reserves and rely

less on liquidity injections by the People's Bank of China. (21st Century

Business Herald)