The cash reserve requirement imposed on banks by China's central bank can be injected into the stock market to boost investor confidence, Jiang Lianhai, a deputy to the National People's Congress said on Monday.

"This capital can be seen as a macroeconomic strategic instrument without the purpose of making profits," said Jiang, who is also the leader of the Securities Association of Jilin province.

Jiang suggested that the banks' capital could be directly invested into the stock market as a buffer fund that can help it avoid fierce fluctuations.

"Another way is to provide the money to securities and fund companies, indirectly invested into the shares," he added.

But China's central bank governor Zhou Xiaochuan said Monday that cuts in banks' reserve requirement ratio (RRR) were not to boost capital market confidence or improve property market liquidity.

Funds released from RRR cuts will flow to different sectors of the national economy in accordance with loan distributions. "There will not be a typical direction," said Zhou.