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RRR Cut Not Linked To SVB - Guan Tao

CHINA PRESS
MNI (BEIJING)

China’s central bank's decision to cut the reserve requirement ratio (RRR) last week was not linked to the collapse of Silicon Valley Bank, but was a proactive policy change to consolidate the economic recovery, according to Guan Tao, former director of State Administration of Foreign Exchange (SAFE). Guan noted a RRR cut was under discussion before the Two Sessions meeting, and although the adjustment was earlier than many had anticipated, the adjustment was made at a reasonable time based on China's economic conditions. The SVB issue was caused by rising U.S. interest rates, which is the opposite monetary policy posture to China. However, Beijing needs to be aware that both financial systems have uneven liquidity distribution between large and small banks.

MNI Beijing Bureau | lewis.porylo@marketnews.com
MNI Beijing Bureau | lewis.porylo@marketnews.com

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