The People's Bank of China (PBOC) or the central bank, said yesterday that it has implemented "dynamically differentiated required reserve ratios" among 40 local banks with low capital adequacy ratios and which witnessed rampant growth in lending since January this year.

A PBOC spokesman said yesterday that the central bank has formalized and boosted the transparency of the dynamically differentiated reserve requirement system, which requires different banks to set aside different levels of deposits with the central bank as reserves according to the individual banks' capital adequacy ratio levels and risk-control requirements.

The dynamically differentiated reserve requirement ratio system offers a more flexible mechanism to adjust lending growth and improve the risk prevention capability of banks.

The spokesman added that the central bank will continue to manage the total market liquidity and implement the prudent monetary policy in the coming months, using tools such as interest rates, open market operations,  besides of dynamically differentiated reserve requirements.

Xinhua