Reserve ratio stands for deposit reserve ratio.
It refers TO THE ratio of the reserves for foreign EXCHANGE deposits deposited WITH the People’s Bank of China by financial institutions to the foreign EXCHANGE deposits they receive.
Foreign exchange reserve is one of the People’s Banks of China;
The People’s Bank of China shall be responsible for determining and adjusting the reserve requirement ratio for foreign exchange deposits, inspecting and supervising the implementation of the provisions on the management of reserve requirements for foreign exchange deposits by banking institutions.
Financial institutions in the People’s Republic of China that take foreign exchange deposits include:
Wholly state-owned commercial Banks, joint-stock commercial Banks, urban commercial Banks, rural commercial Banks, urban credit cooperatives, rural credit cooperatives (cooperation) and enterprise group finance companies, solely foreign-funded Banks, sino-foreign joint venture Banks, solely foreign-funded financial companies, sino-foreign joint venture financial companies and foreign bank branches and other financial institutions to absorb the foreign exchange deposit.
1. Individual foreign exchange savings deposits, corporate foreign exchange deposits, petty fund deposits for issuing foreign currency credit cards and other foreign exchange deposits or liabilities approved by the People’s Bank of China accepted by financial institutions.
2. The credit balance of the principal and agent liabilities and assets of the financial institution after the reduction.
Where the balance of the debits is reduced, the balance of the DEBits shall be regarded as zero, and no debit balance shall be set off against the balance of other foreign exchange liabilities.
3. The People’s Bank of China shall, in accordance with the needs of regulation and control, stipulate and adjust the scope of foreign exchange deposits that financial institutions shall pay as reserves for foreign exchange deposits.
