Experts weigh in on central bank move to cut RRR

Zeng Gang, deputy director-general of the National Institution for Finance and Development

The medium- and long-term capital brought by the RRR cut, on the one hand, could reduce banks' cost of debt, encourage them to put more funds in capital with higher yield, and correspondingly reduce the cost of capital. On the other hand, long-term funds could, to some extent, promote banks' medium- and long-term loan growth.

More than 120 billion yuan in long-term funds is expected to be unlocked for small and medium-sized lenders, which will build up their capacity to support the targeted enterprises, said the central bank. Zeng said the country is increasing support for small, micro and private businesses, optimizing their supply structure to ensure supply and demand is matched.