Bank Of China Raises Reserve Ratio...Again

The Central Bank of China tolder lenders to increase their reserves 0.5 percent according to a statement released by the organization Thursday.

BEIJING (AP) -The Central Bank of China told banks to increase their reserves for the third time this year, according to a statement released by the organization Thursday.

The amount of reserves lenders must keep with the central bank was raised 0.5 percent to 10.5 percent. The increase takes effect April 16.

This is the third time the central bank raised the deposit reserve ratio this year.

The central bank said in a statement released Thursday that it will continue prudent monetary policies, tighten control over bank liquidity to maintain a proper liquidity level and to prevent excessive growth in monetary credit.

Chinese leaders want to maintain rapid growth in the economy, which expanded 10.7 percent last year. But they worry that excessive investment in real estate, factories and other assets will leave banks with dangerously high debt if borrowers go bankrupt.

The move showed the central bank's determination to continue to tighten liquidity management, a major problem threatening China's economy.

More in Supply Chain