China's central bank reuses special RMB deposit to curb excess liquidity

China's central bank reuses special RMB deposit to curb excess liquidity
Oct 16, 2007 22:59
ICEBERG Points: Join Date: Sep 10, 2007 Status: offline	It is reported that China's central bank will reuse the special RMB deposit to absorb money from those banks and credit cooperatives to curb excess liquidity in the near future. The three-month deposit rate and one-year rate for the speical RMB deposit are 2.91% and 3.44%. From Oct.23rd, the banks and credit cooperatives can apply for it. The special RMB deposit is an effect way to ease the excess liquidity problem. Those financial instituations deposit their money at central bank and central bank pay interests to them. Thus, less money will be circulated in the market. China just used special RMB deposit in 1987 and 1988. After 20 years, this policy was reused again. However, I just wonder whether this policy will take effect to curb excess liquidity. Though the government has adopted many measures to curb the excess lliquidity, those measures did not take effect as we expected, which are included raising reserve ratio eight times, adjusting export tax rebate, issuing special bonds and reducing individual income tax. What do you think?

Oct 16, 2007 22:59

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Join Date: Sep 10, 2007
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It is reported that China's central bank will reuse the special RMB deposit to absorb money from those banks and credit cooperatives to curb excess liquidity in the near future. The three-month deposit rate and one-year rate for the speical RMB deposit are 2.91% and 3.44%. From Oct.23rd, the banks and credit cooperatives can apply for it.

The special RMB deposit is an effect way to ease the excess liquidity problem. Those financial instituations deposit their money at central bank and central bank pay interests to them. Thus, less money will be circulated in the market. China just used special RMB deposit in 1987 and 1988. After 20 years, this policy was reused again.

However, I just wonder whether this policy will take effect to curb excess liquidity. Though the government has adopted many measures to curb the excess lliquidity, those measures did not take effect as we expected, which are included raising reserve ratio eight times, adjusting export tax rebate, issuing special bonds and reducing individual income tax. What do you think?

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