She asserted that despite the current cautious reactions of both the Central Bank and the Banking Regulation Board, including the ones over required reserve ratios
, the reserve option mechanism, proves to be working fine but the challenges have not been overcome and the cautious policies should be kept.
The bank will basically impose higher required reserve ratios
on banks whose leverage ratio -- a measure of their capital against total assets -- is 3 percent or below.
They did so by using the tools that are now commonplace, such as altering required reserve ratios
and discount rates and engaging in open-market operations.
This follows the May 12th announcement that China would cut its required reserve ratios
by 50 bps to inject liquidity into the financial system.
The outcome dampened expectations of an imminent move by the central bank to cut banks' required reserve ratios
(RRR), the level of cash they must hold in reserve.
The Chinese central bank may announce a 50 basis-point cut in banks' required reserve ratios
at the end of this month, Economic Information 'Daily' reported yesterday.
Turkey's banks have been facing intense pressure as the central bank has raised banks' required reserve ratios
five times since last November to limit credit growth to 25 percent this year, after loans increased by 34 percent last year, Dow Jones noted in a related report.
Moreover, the bank has reduced the required reserve ratios
for foreign-exchange deposits by 0.
European equities pared earlier gains after China's central bank raised lenders' required reserve ratios
in a move which also briefly reversed a rally in Brent crude prices.
The central bank cut interest rates to make yields less attractive to hot money inflows and raised required reserve ratios
to drain excess liquidity and curb credit growth.
At the same time, it raised required reserve ratios
to balance inflationary effects and cool rampant credit growth, by forcing lenders to deposit more money with the central bank rather then dishing it out in cheap loans to consumers.
Including an earlier temporary increase, the move takes required reserve ratios
(RRR) to 18.