What does the central bank mean by cutting the RRR and what does the central bank mean by cutting th

The central bank's RRR cut means to reduce the deposit reserve ratio, which is paid by commercial banks to the central bank, which has the characteristics of mandatory payment and can prevent risks such as runs. Assuming that the original reserve requirement ratio is 25%, then if a customer deposits 1,000 yuan in a commercial bank, the commercial bank must pay 250 yuan to the central bank, and the remaining 750 yuan can be loaned abroad. If the reserve requirement ratio drops to 20%, if the customer deposits 1,000 yuan in a commercial bank, the commercial bank only needs to pay 200 yuan to the central bank, and 800 yuan can be loaned abroad.

The RRR cut is the reserve requirement ratio. If it is reduced by 1%, it means the same 1 million, and the bank can lend 10,000 more. Don't underestimate this 1%, the amount of bank funds is huge, and if you drop 1%, you can release trillions, which will eventually flow to enterprises that lack money, which is usually good for the **, property market and bond market.

The central bank's RRR cut refers to reducing the reserve requirement ratio, which is to reduce the money deposited by commercial banks in the central bank, which is to increase the bank's money, so that banks can lend more money to enterprises; Interest rate cut refers to reducing interest, reducing the interest rate of people's savings, encouraging people to consume, and also reducing the interest rate of corporate loans, encouraging enterprises to invest, thereby driving economic growth, which is in line with the state's proposal to ensure growth, and also in line with the central bank's active fiscal policy and prudent monetary policy.

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What does the central bank's RRR cut mean.

The central bank's RRR cut means that the bank lowers the deposit reserves of other commercial banks. The purpose of the central bank in setting the deposit reserve is to prevent the bank's risks and improve the safety of the bank and funds, and all commercial banks must implement the deposit reserve system stipulated by the central bank. Under this system, there is a situation where the ants are arguing about the RRR cut.

For example, when the reserve requirement ratio originally stipulated by the central bank was 20%, if this ratio is lowered to 18%, it will be a 2 percentage point reduction.

For most people, one of the main purposes of depositing their money in the bank is to get interest, and in the same way, no matter which commercial bank it is, it also needs to put the deposits it receives into the central bank, and at this time, the commercial bank can also get the corresponding deposit interest rate. Deposits are the precursors of commercial banks' loans, but the two are not equal, and the former is greater than the latter, which is the deposit reserve system.

Most of the world's central banks are only responsible for financial management, and will not involve specific deposit and loan business, and in order to regulate the amount of funds in the market, most of them are achieved by adjusting the deposit reserve ratio. For example, among the 10 million funds, 20% of the original 2 million yuan will be deposited in the central bank, and if the RRR is reduced by 1%, commercial banks only need to deposit 19% of the funds, and the extra 1% can be used in the market, that is, commercial banks can circulate in the market in the form of loans. From this small example, we can know what the RRR cut means, but in the actual market rotation, the scale of funds is often calculated in trillions, so it must only be reduced by 1%, and the funds involved are also very large.

Just as you need to open a bank account to deposit money in a commercial bank, a commercial bank also needs to open a deposit account to deposit money in the central bank, but the deposits of commercial banks in the central bank are divided into two parts: statutory deposit reserves and excess deposit reserves, the statutory deposit reserves refer to the minimum deposit limit of commercial banks in the central bank, and the excess deposit reserves refer to the part of the funds that exceed the statutory deposit reserves.

The RRR cut means to reduce the statutory reserve ratio, and we will use specific examples to understand it below.

Assuming that the bank's statutory deposit reserve ratio is 15%, and A deposits 1,000 yuan in the bank, then the bank must deposit at least 1,000 15% = 150 yuan into the central bank's statutory deposit reserve account, and the remaining 850 yuan can be used as the bank's working capital. If the bank deposits 200 yuan with the central bank, then 50 yuan more than the statutory reserve is the bank's excess deposit reserve.

If the statutory reserve ratio is adjusted to 14%, then the new statutory reserve requirement will be 140 yuan, and the bank's liquidity will be 10 yuan more, and because the balance of Chinese RMB deposits is very large, a 1% reduction in the statutory reserve ratio can have a very big impact.