PBOC tweaks method to assess reserve ratio

China's central bank has tweaked the way it will assess banks' reserve ratios and said the new methodology will help keep the financial system flowing should funding dry up.

The new compilation method - which will use average levels over a period instead of a daily calculations - could help release liquidity in some situations and maintain stability in the money markets, the People's Bank of China said on Friday in a statement on its website.

"The purpose of the average-based method is mainly to improve the flexibility and convenience of liquidity management at financial institutions," the central bank said in the statement. The new rules take effect from Tuesday.