Banking

China raises bank reserves to calm credit growth

(Agencies)
Updated: 2010-11-10 16:35

China's central bank has ordered some banks to increase their reserve requirements by 0.5 of a percentage point in an apparent effort to curb rapid credit growth, three industry sources told Reuters on Wednesday.

Related readings:  Japan central bank cuts economic growth forecasts   China's interest rate rise - one off or more to come?  Surprise rate hike announced  China central bank raises deposit rate by 25 bps

Chinese banking and property shares fell after the news, which fuelled market fears authorities may tighten policy further to ward off the risks of stronger inflation and asset bubbles at a time when capital inflows are growing.

Chinese officials have raised concern that the US Federal Reserve's decision to pump $600 billion into the US economy would lead to capital inflows hitting emerging markets, reflecting global tensions over economic rebalancing on the agenda of the G20 summit in Seoul.

The sources said the targeted banks included Bank of China, which fell 3.1 percent in Hong Kong, and Bank of Communications, which dropped 3.4 percent.