MNI: China May Cut Banks' RRRs To Boost Liquidity: Newspaper

     BEIJING (MNI) - The People's Bank of China (PBOC) may cut required reserve

ratio (RRR) for banks to ease expected tight liquidity in June and July, the

official China Securities Journal said Tuesday in a front-page commentary.

     "It's expected that the PBOC would increase OMO injection and money supply

for banks to smoothly go through inter-quarterly period" when banks face various

regulatory examinations such as macro-prudential assessment and liquidity

coverage ratio requirement at the end of every quarter, said the newspaper.

     "The option of an RRR cut in exchange for other requirements by the PBOC,

such as last time when banks were required to pay back the medium-term lending

facility to the central bank, could be considered," the newspaper said.

     The newspaper said that liquidity condition in June and July may mainly

depend on action by the PBOC, while money supply likely won't experience large

fluctuations and money market rate may be relatively stable.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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