Bank of Finland paper investigates China’s evolving reserve requirements
Authors of a new Bank of Finland discussion paper, Guonan Ma, Yan Xiandong and Liu Xi, examine the evolving role of reserve requirements as a policy tool in China.
The researchers state that, since 2007, "the Chinese central bank has relied more on this tool to withdraw domestic liquidity surpluses, as a cheaper substitute for open-market operation instruments in this period of rapid FX accumulation".
The paper finds that China's reserve requirement system has also become more complex and has
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