China to Lower Banks’ Reserve Requirement, Releasing $126 Billion

China’s central bank announced on Friday that it will cut the amount of cash lenders must set aside as reserves, freeing up additional liquidity in the banking system in a bid to support the economy.

The People’s Bank of China (PBOC) will lower the reserve requirement ratios (RRRs) by 50 basis points for all banks on Sept. 16, according to its statement (link in Chinese). The cut does not apply to finance companies, financial leasing companies and automobile finance companies. A basis point is one-hundredth of a percentage point.