BEIJING (XFN-ASIA) – Several commercial banks in China have been allowed to use US dollar holdings to meet the lenders’ required reserve requirement with the central bank, China Business News reported.
The newspaper, citing unidentified sources, said commercial banks have been allowed to use their own foreign exchange reserves or that purchased from the central bank, to meet the statutory reserve requirements with the People’s Bank of China (PBoC).
Exchange rate risks will be borne by the PBoC, the sources were quoted as saying.
The report said that several banks have already used that route since the August 15 reserve requirement hike. China Construction Bank, Agricultural Bank of China, Bank of China, Industrial and Commercial Bank of China, Bank of Communications and three other smaller lenders are said to be among those.
Banks’ reserve ratio will stand at 13 pct from Oct 25, after the latest hike announced last weekend.
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