China’s central bank will include margin deposits in calculations of required reserves for banks to “strengthen control of the reserve system,” according to a People’s Bank of China (PBOC) document obtained by Bloomberg News.
The change will be implemented in three stages for large banks, including Industrial and Commercial Bank of China Ltd (中國工商銀行), Agricultural Bank of China Ltd (中國農民銀行), Bank of China Ltd (中國銀行), China Construction Bank Corp (中國建設銀行) and Bank of Communications Co (交通銀行), starting on Monday, the document said.
Chinese officials are seeking to control inflation and credit risks after record lending fueled the nation’s recovery from the global financial crisis.
The reserve-ratio move is intended to discourage banks from engaging in “excessive off-balance sheet activities,” UBS AG -economist Wang Tao (王濤) said in a report yesterday.
Smaller banks will make the change in six stages starting from Sept. 15, according to the document dated Friday. Foreign-currency margin deposits must be included from Sept. 15, it said.
The PBOC declined to comment.