Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

China tightens bank holding requirement

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- China, in response to the Federal Reserve's move to inject billions into the U.S. economy, has raised the reserve requirement ratio on major banks in an attempt to control its flow of new money.

The People's Bank of China raised the ratio by half a percentage point between now and Nov. 16.

Mark Williams, senior China economist for Capital Economics Ltd. in London, said the new ratio is unknown, but it's probably 18.5%.

"The reserve ratio hike helps the People's Bank to mop up some of the currency flowing into the Chinese economy from strong exports and inward investment," he said. "But the move also allows policymakers to signal their continued concern about the current pace of loan growth."

The Chinese government is one of several that has been critical of the Fed's decision last week, calling it inflationary. U.S. officials, on the other hand, have been trying to get Beijing to increase the value of its currency in order to help spur a global economic recovery. (It's not just the dollar's fault)

The reserve ratio increase is completely separate from the currency controls that the People's Bank imposes on the renminbi every day.

The move came after China announced that its trade surplus surged in October to $27.2 billion, up more than 60% from its September surplus of $16.9 billion. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed4.03%3.99%
15 yr fixed3.18%3.16%
5/1 ARM3.29%3.32%
30 yr refi4.07%4.02%
15 yr refi3.19%3.18%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 19,885.73 -5.27 -0.03%
Nasdaq 5,574.12 26.63 0.48%
S&P 500 2,274.64 4.20 0.18%
Treasuries 2.38 0.02 0.80%
Data as of Jan 14
Company Price Change % Change
Bank of America Corp... 23.01 0.09 0.39%
FMC Technologies Inc... 35.85 -0.15 -0.42%
Wells Fargo & Co 55.31 0.81 1.49%
Freeport-McMoRan Inc... 15.19 -0.08 -0.52%
Ford Motor Co 12.63 0.04 0.32%
Data as of Jan 13
Sponsors

Sections

Tech's FANG stocks -- Facebook, Amazon, Netflix and Google owner Alphabet -- are surging. Investors seem more excited about Donald Trump's stimulus and tax plans than worried about protectionist talk. But are the stocks too hot? More

Eight men now control as much wealth as the world's poorest 3.6 billion people, according to a new report from Oxfam International. More

Tech's FANG stocks -- Facebook, Amazon, Netflix and Google owner Alphabet -- are surging. Investors seem more excited about Donald Trump's stimulus and tax plans than worried about protectionist talk. But are the stocks too hot? More

Rhode Island Governor Gina Raimondo wants to make two years of tuition free for residents enrolled at public colleges. More