China's central bank frees up $188 billion as Evergrande default fears rise

China’s central bank expanded the supply of money for lending on Monday as Beijing tried to reassure its public and investors the economy can be protected if the troubled real estate developer Evergrande’s $310 billion mountain of debt collapses.

The People’s Bank of China (PBOC) said it would cut the amount of cash that banks must hold in reserve, its second such move this year, releasing 1.2 trillion yuan ($188 billion) in long-term liquidity.  

The move came just before Evergrande Group announced it has set up a risk management committee that includes officials from state entities. The cash-strapped property developer is inching closer to a debt restructuring.

The troubled realtor said the panel would play a key role in “mitigating and eliminating the future risks” of the group. 

Earlier, the central bank said on its website it would cut the reserve requirement ratio for banks by 50 basis points, effective from December 15.

Evergrande Group’s struggle to turn assets into cash has prompted fear a default might chill Chinese lending markets and cause global shockwaves.