China tweaks reserve ratio tool, fewer cuts seen likely

Beijing

AS investors continue to grapple with China's economic slowdown, regulators may be taking away an old standby for monetary easing.

The required reserve ratio for commercial banks, a tool long used to add or remove liquidity, will increasingly be used instead as a lever for enforcing financial stability. That's according to a People's Bank of China announcement on Dec 29 describing a new Macro Prudential Assessment system, or MPA.

The idea is to use the ratio of de…