{"id":35447,"date":"2018-06-24T09:17:38","date_gmt":"2018-06-24T14:17:38","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35447"},"modified":"2018-06-24T09:17:38","modified_gmt":"2018-06-24T14:17:38","slug":"china-cuts-reserve-ratio-unlocks-700bn-yuan-amid-rising-trade-war-mass-defaults-and-margin-calls","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35447","title":{"rendered":"China Cuts Reserve Ratio, Unlocks 700BN Yuan Amid Rising Trade War, Mass Defaults And Margin Calls"},"content":{"rendered":"
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China Cuts Reserve Ratio, Unlocks 700BN Yuan Amid Rising Trade War, Mass Defaults And Margin Calls<\/span><\/a><\/h3>\n<\/div>\n
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As widely expected, China’s central bank announced <\/a>it would cut the Required Reserve Ratio (RRR) for some banks by 0.5% effective July 5, just over two months after the PBOC did a similar cut on April 17<\/a>, the first such easing since the start of 2016.<\/p>\n

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The move is expected to unlock 700 billion yuan ($108 billion) in liquidity amid growing trade war tensions, a sharp slowdown in the Chinese economy, a tumbling stock market, rising forced margin call, and a spike in corporate defaults.<\/p>\n

According to the central bank, the aim of the cut is” to support small and micro enterprises, and to further promote the debt-to-equity swap program.” The cut will apply to major state-run commercial banks, joint-stock commercial lenders, postal banks, city commercial lenders, rural banks and foreign banks, in other words: virtually everyone.<\/p>\n

\u201cThe size of the liquidity being unleashed has beat expectations and it\u2019s larger than the previous two cuts this year\u201d, said Citic fixed income research head Ming Ming. \u201cIt\u2019s almost a universal cut as it covers almost all lenders.\u201d<\/p>\n

The RRR cut was also widely expected following the publication of a central bank working paper on Tuesday calling for such a cut.<\/p>\n

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A cut in China’s RRR by the PBOC is imminent following central bank\u2019s working paper released Tuesday arguing for such a cut.<\/p>\n

5:06 PM – Jun 20, 2018<\/a><\/time><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n
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According to Bloomberg, the cut is designed to achieve two things:<\/p>\n

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  • The 500 billion yuan unlocked for the nation\u2019s five biggest state-run banks <\/strong>and 12 joint-stock commercial lenders will be channeled to debt-to-equity swaps, which can reduce companies\u2019 debt burdens and help cleaning up banks\u2019 balance sheets. It comes following no less than 20 corporate bond defaults in 2018, and ahead of a wave of corporate repayments that has prompted analysts to express fears about a default avalanche.<\/li>\n<\/ul>\n

    \u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n

    <\/div>\n","protected":false},"excerpt":{"rendered":"

    China Cuts Reserve Ratio, Unlocks 700BN Yuan Amid Rising Trade War, Mass Defaults And Margin Calls As widely expected, China’s central bank announced it would cut the Required Reserve Ratio (RRR) for some banks by 0.5% effective July 5, just over two months after the PBOC did a similar cut on April 17, the first […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[122,130,2606,20651,20650,2914,2615,8420,3222,1031,4318],"class_list":["post-35447","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-bank","tag-china","tag-defaults","tag-liqudity","tag-margin-calls","tag-pboc","tag-peoples-bank-of-china","tag-reserve-ratio","tag-trade-war","tag-yuan","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35447"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35447\/revisions"}],"predecessor-version":[{"id":35448,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35447\/revisions\/35448"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}