A cut in the reserve ratio requirement to be effective today will release additional liquidity and stimulate the economy, says Shanghai Securities News.

The People's Bank of China has announced a 1-percent reduction in the reserve ratio requirement for deposit taking financial institutions, a measure that should release about 150 billion yuan into the economy. However six major banks, the Agricultural Bank of China, Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Bank of Communications and the Postal Savings Bank are excluded from the cut.

Yesterday, the Shanghai Stock Exchange Treasury bond index rose 0.16 percent to reach a new historical high of 116.19. The Corporate bond Index increased by 0.27 percent.

Some commentators fear the 150 billion yuan released by the cut in the reserve requirement ratio is insufficient and will have limited positive effect on the economy.

For more details, please read the complete story in Chinese:

(http://paper.cnstock.com/paper_new/html/2008-09/25/content_64535688.htm)

(China.org.cn by Fan Junmei, September 25, 2008)