China Tightens Liquidity to Tackle Inflation Presenters: 高绍秀 林丽美

China raised banks’ reserve ratio requirements on Sunday. the fourth time this year that Beijing has used this tool to tighten liquidity. The move underscores Beijing’s commitment tomonetary tightening at a time when other economies, including the European Central Bank, are also beginning monetary tightening.

China’s central bank said it was raising the reserves that commercial banks must deposit with the central bank to 20.5 per cent, an increase of 50 basis points, with effect from April 21. Controlling inflation is China’s top economic priority, but monthly inflation data have remained high despite several rounds of tightening. March’s consumer price index rose to 5.4 per cent, the highest level in nearly three years.

The move by the People’s Bank of China came after Tim Geithner attacked the International Monetary Fund’s failure to use its existing tools to tackle China’s tightly managed exchange rate. An alternative policy option for China to tackle its domestic inflation is allowing a greater appreciation in the renminbi. But comments to the IMF’s governing body in Washington over the weekend highlighted the divisions between developed and developing countries on the causes of imbalances in the global economy.

Words & Expressions deposit reserve ratio : 存款储备金率 highlight / underscore: 强调 governing body: 理事会 monetary tightening: 货币紧缩 consumer price index: 消费价格指数

Background Information 存款储备金率（ reserve ratio ） 定义：存款准备金是指金融机构为保证 客户提取存款和资金清算需要而准备 的在中央银行的存款，而中央银行要 求的存款准备金占其存款总额的比例 就是存款准备金率。 影响：上调存款准备金率的举动则意味 着一定数额的银行资金将被冻结，目 的是为了控制宏观经济过热，向市场 传递出强烈的抑制投资过热的信号。 反之，下调存款准备金率则是为了刺 激经济，鼓励投资。