China cuts reserve ratio

China cuts reserve ratio

Props used during a ceremony for the issue of China's RMB sovereign bonds are seen in this illustration photo in Hong Kong.

China's central bank cut the reserve requirement ratio for its banks on Wednesday for the first time in nearly three years to ease credit strains and shore up activity in the world's second-largest economy.

The 50-basis-point cut in the reserve ratio showed China's monetary policy has swung into easing mode as economic growth slows while inflation eases.

The cut lowers the reserve ratio for China's biggest banks to 21% from record highs, and frees up funds that could lubricate lending to cash-deprived small firms.

The new ratio is effective December 5, the central bank said in a short statement on its website.

An employee checks an Euro note at the Bank of Taiwan head office in Taipei.

Europe faces a crucial 10 days to save the euro zone after agreeing to ramp up the firepower of its bailout fund but acknowledging it may have to turn to the International Monetary Fund for more help to avert financial disaster.

"We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union," Economic and Monetary Affairs Commissioner Olli Rehn said on Wednesday as EU finance ministers met.

Euro zone ministers agreed on Tuesday night on detailed plans to leverage the European Financial Stability Mechanism (EFSF), but could not say by how much because of rapidly worsening market conditions, prompting them to look to the IMF.

Montek Singh Ahluwalia is seen in Davos.

Investment in India should pick up in the second half of the fiscal year and help boost growth, which slowed to its weakest pace in more than two years in the September quarter, Montek Singh Ahluwalia said on Wednesday.

Ahluwalia told TV news channel ET Now the economy would grow 7-7.5% for the full fiscal year to March.

Growth in July-September slowed to 6.9%, revealing the heavy toll that stubbornly high inflation, rising interest rates and crisis-hit global capital markets are having on Asia's third-biggest economy.