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CHINA PRESS
CHINA PRESS: Regulators could consider setting up a new multilevel reserve
requirement system to reduce pressure on liquidity and avoid the negative
effects of the current reserve requirement system, Zong Liang, chief economist
at Bank of China, said in a commentary published Thursday in the Financial News,
a journal run by the People's Bank of China.  Zong suggested China could have
two levels of deposit reserve requirement, a legally required minimum deposit
reserve ratio of 7% and a voluntary adjusted one with a ratio of 10%. Commercial
banks could borrow from the central bank using the additional adjusted reserve
money stored at the central bank as collateral, Zong said. Monetary policy
should focus on guiding market expectations and deleveraging at a moderate and
stable pace in the second half of this year. The central bank should increase
its injections of medium- and long-term capital via the Medium-term Lending
Facility, particularly as regulations tighten and key macro-prudential
assessments occur, Zong noted. Deleveraging the real economy is the key and
macroeconomic policy needs to balance deleveraging with liquidity stability,
Zong added. (Financial News)

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