Central bank moves to cut lenders' funding costs

RRR reduction will increase supply of long-term capital, stabilize liquidity

China's central bank announced a cut in some financial institutions' reserved cash amount by 1 percentage point from April 25 to support small and micro enterprises and stabilize liquidity in the banking system, according to a statement on its website released on Tuesday.

The move is expected to free about 1.3 trillion yuan ($206.99 billion) in total, and 900 billion yuan of that will be used to pay back the funds borrowed by commercial banks via the Medium-term Lending Facility (MLF), an open market operation tool to maintain liquidity using securities as collateral, said the People's Bank of China, the central bank.