In order to support the development of the real economy and promote the steady decline of comprehensive financing costs, the People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points in July 20021and 15 (except for financial institutions that have implemented the deposit reserve ratio of 5%). After this reduction, the weighted average deposit reserve ratio of financial institutions is 8.9%.

Since the beginning of this year, the prices of some commodities have continued to rise, and some small and micro enterprises are facing operational difficulties such as rising costs. China adheres to the stability and effectiveness of monetary policy, and does not engage in flood irrigation, but makes precise efforts to increase support for small and micro enterprises.

In the next step, the People's Bank of China will continue to implement a prudent monetary policy, adhere to the principle of prudence, maintain a reasonable and abundant liquidity, keep the growth rate of money supply and social financing basically matching the nominal economic growth rate, do a good job in cross-cycle design, support small and medium-sized enterprises, green development and technological innovation, and create a suitable monetary and financial environment for high-quality development and supply-side structural reform.

The RRR cut does not mean that the orientation of prudent monetary policy has changed:

In response to the epidemic in 2020, the People's Bank of China will adhere to the normal monetary policy. After May, the intensity gradually turned to normal, and basically returned to the normal state before the epidemic in the first half of this year.

The RRR cut is a routine operation after the monetary policy returns to normal. Part of the released funds will be used by financial institutions to repay the medium-term loan facility (MLF) due, and part will be used by financial institutions to make up for the liquidity gap caused by the tax peak in the middle and late July, so as to increase the proportion of long-term funds of financial institutions, and the total amount of liquidity in the banking system will remain basically stable.

At present, China's economy is improving steadily. The People's Bank of China adheres to the stability and effectiveness of monetary policy, adheres to the normal monetary policy, and does not engage in flood irrigation.

For the above contents, refer to the paper-Central Bank: On July 15, RRR was lowered by 0.5 percentage point, releasing long-term funds of about 1 trillion.