China to cut banks' reserve requirement to combat virus fallout

China's central bank said Friday it would cut the reserve requirements for banks, releasing some 550 billion yuan (USD 79 billion) in liquidity as the country fights to control the economic fallout of the deadly coronavirus.

The People's Bank of China (PBoC) said in a statement that it would cut the reserve requirement ratio (RRR) on March 16 by 50 to 100 basis points for banks that meet its assessment criteria, reducing the amount of cash they must hold.

There will be an additional 100 basis point reduction for eligible joint-stock commercial banks, to support the issuance of loans, said the PBOC.

The central bank's moves come a day after China's State Council released a statement saying Premier Li Keqiang called for targeted RRR cuts soon, to support bank lending to small- and medium-sized enterprises.

Julian Evans-Pritchard, senior China economist at Capital Economics, said the move was "yet another step in (the central bank's) campaign to push down borrowing costs and shore up economic activity in response to the coronavirus outbreak."