The People's Bank of China (PBoC) implemented on 15 May 2025 the 50-basis-point reduction in the reserve requirement ratio (RRR) that Governor Pan Gongsheng announced on 7 May, releasing approximately ¥1 trillion in long-term liquidity into the country's banking system. The cut marks the first RRR reduction of 2025, following two similar measures carried out during 2024.
The RRR determines the minimum proportion of deposits that banks must hold in reserve with the central bank rather than deploying into loans and other assets. A reduction in this ratio effectively converts a portion of those required reserves into funds that banks can lend or invest, increasing the supply of credit available to households and businesses without requiring direct central bank lending operations.
SCALE OF LIQUIDITY RELEASED
The 50-basis-point cut is estimated to have released approximately ¥1 trillion in long-term liquidity.
PREVIOUS CUTS
The May 2025 RRR cut follows two reductions implemented in 2024.
For commercial banks operating in China, the reduction lowers their required reserve levels.