The People’s Bank of China decided to raise the RMB reserve requirement ratio of deposit-takingfinancial institutions by 0.5 percentage points as of November 15, 2006.

The PBC has employed various monetary policy instruments to drain liquidity from the banking sector since the beginning of this year. These efforts have resulted in the easing of excess liquidity. However, BOP still runs a surplus and new excess liquidity exits in the banking sector. On the basis of the liquidity dynamics, the PBC decided to raise reserve requirement ratio again to consolidate liquidity control effects.

The PBC will continue to pursue a sound monetary policy and maintain the continuity and stability of monetary policy, keep the steady growth of money and credit, support extension of direct financing channels and promote the sustained, balanced and healthy development of the national economy.