What does it mean that the central bank raised the reserve requirement ratio?

An increase in the reserve requirement ratio will put upward pressure on interest rates, which is a signal of a tighter monetary policy. The RRR is specific to financial institutions such as banks, and the impact on end customers is indirect; Interest rates are specific to the end customer, such as the interest on your deposit, and the impact is immediate.

The reserve requirement ratio has an impact on the total amount of loans and the amount of money in the society. Raising the reserve requirement ratio correspondingly reduces the amount of money, interest rates will rise, so that people's CPI index will fall, and the ultimate goal is to reduce the inflation rate.

The increase in the reserve requirement ratio may force banks to raise their down payments on mortgages. In the case of the further reduction of bank credit, the increase in the down payment ratio of the loan for the first home may become a reality for the sake of operating profits or business risks, and the pressure on first-time home buyers to buy a house may increase as a result.

The increase in the reserve requirement ratio means that commercial banks are less able to lend money and create credit. Because the reserve ratio increases, the currency multiplier.

It will become smaller, thus reducing the ability of the entire commercial banking system to create credit and expand the scale of credit.

As a result of the increase in the reserve requirement ratio, the monetary system of the society is tight, the amount of money is reduced, and the loans obtained by the people from commercial banks are reduced, and the interest rate is reduced.

Increase, investment and social spending have been reduced accordingly.

Extended Information:1Deposit reserve refers to the deposit reserve prepared by financial institutions in ** bank to ensure that customers need to withdraw deposits and clear funds.

**The reserve requirement ratio is the ratio of the bank's required reserve requirement to its total deposits.

2.Reserve is the fund that is required to limit the credit expansion of financial institutions and ensure that customers withdraw deposits and settle funds. Statutory reserve ratio.

It is the ratio of the deposit reserves paid by financial institutions to ** banks in accordance with the regulations to the total amount of their deposits.

3.In order to support the development of the real economy and promote the steady decline of comprehensive financing costs, the People's Bank of China.

It was decided to reduce the reserve requirement ratio of financial institutions on December 15, 2021.

percentage points (excluding financial institutions that have implemented a 5% reserve requirement ratio). After this downward adjustment, the weighted average of financial institutions.

The reserve requirement ratio is .

Deposit reserves, also known as statutory deposit reserves or deposit reserves, refer to the deposits in ** banks prepared by financial institutions to ensure that customers withdraw deposits and settle funds. **The reserve requirement ratio (RRR) is the ratio of the bank's reserve requirement to its total deposits. By adjusting the reserve requirement ratio, banks can affect the credit expansion ability of financial institutions, thereby indirectly regulating the amount of money.

4.When the bank raises the statutory reserve ratio, the ability of the commercial bank to provide loans and create credit decreases. Because the reserve ratio increases, the money multiplier becomes smaller, thus reducing the ability of the entire commercial banking system to create credit and expand the scale of credit, and the result is that the monetary system of the society is tight, the amount of money is reduced, the interest rate is increased, and investment and social expenditure are reduced accordingly.

And vice versa. For example, if the reserve requirement ratio is 7%, it means that for every 1 million yuan of deposits absorbed by financial institutions, they have to pay to the central bank.

The deposit reserve of 70,000 yuan is deposited, and the funds used to issue loans are 930,000 yuan, and if the deposit reserve ratio is raised to 10,000 yuan, the loanable funds of financial institutions will be reduced to 10,000 yuan.

The central bank's increase in the deposit reserve ratio refers to the increase in the statutory deposit reserve ratio of the first bank to each commercial bank, and the deposit reserve section is the bank deposit that each commercial bank must deposit into the reserve account of the first bank according to a certain envy ratio according to the requirements of the law, and the deposit ratio is the deposit reserve ratio. **Banks can adjust the macro economy by adjusting the reserve requirement ratio, and the main mode of action is to adjust the amount of money in circulation in the market by adjusting the reserve requirement ratio.

The increase in reserve requirements will lead to a decrease in the amount of money in circulation, resulting in a tightening of the real economy and deflation. Deposit reserve is the deposit of ** bank prepared by commercial banks and other financial institutions in order to ensure the realization of customer deposit and withdrawal business and fund clearing. Raising the reserve requirement ratio will increase the reserves of financial institutions, which will correspondingly reduce the amount of their liquidity, and then reduce the issuance of various types of loans to ordinary people, and the circulating cash in the market will be reduced, which will lead to a phenomenon in which consumption is suppressed, investment is suppressed, and the overall economy is tightened.