According to an announcement from the People's Bank of China, the required reserve ratio will be reduced by 25 basis points starting from September 15. The decision is stated to aim at "strengthening the foundation for economic recovery and providing sufficient liquidity to the market," according to the announcement.
Following this decision, the weighted average required reserve ratio for financial institutions will decrease to 7.4 percent.
The move, which aims to provide more liquidity to the market and ease the credit market, is estimated to release approximately 500 billion yuan (around 68.7 billion dollars) in cash assets.
The People's Bank of China last lowered the required reserve ratios on March 17.
The bank had previously announced that the required reserve ratio for foreign exchange deposits that banks and financial institutions must hold as reserves would be reduced from 6 percent to 4 percent starting from September 15.
