China Central Bank to Inject $81 Billion Into Top Lenders
China became on Wednesday the latest country to embrace economic stimulus measures, as its central bank reportedly agreed to lend 100 billion renminbi apiece, or $16.2 billion, to each of the country’s five main banks.
The decision to inject a total of $81 billion into the banking system came as the Chinese economy, like many economies in Europe, seemed to slow somewhat over the summer, although still expanding faster than most countries around the world.
Stock markets in much of Asia surged on Wednesday morning in response to the action by the central bank, the People’s Bank of China.
China’s five biggest banks, which account for at least three-fifths of the market by various measures, are the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications.
The Chinese action comes a day before the European Central Bank begins a program to provide banks with extremely low-rate loans, provided that the banks promptly relend the money in the private sector.
Like the European approach, China’s measure is narrowly targeted.
Because the central bank gets to decide in three months whether to extend the loans or call them in, the measure is more limited than, for example, reducing the percentage of a bank’s assets that it must keep as reserves, Western economists said.
Source: NYT- China Central Bank to Inject $81 Billion Into Top Lenders
