The Latest: China frees up $80 billion more for lending
The Latest on financial markets:
China’s government on Friday freed up additional money for lending by reducing the amount of their deposits commercial banks are required to leave on reserve at the central bank.
The required reserve ratio will be cut by between 0.5 and 1 percentage points for banks that meet regulatory targets for lending to small and private businesses, effective March 16, the central bank announced. It said that should release an additional 550 billion yuan ($80 billion) for lending.
The People’s Bank of China said that was intended to lower financing costs and support economic recovery.
China often uses such reductions to increase the amount of money available for lending without changing interest rates. A similar cut in the reserve ratio in January released 800 billion yuan ($115 billion).
Sweden’s central bank says it will lend up to 500 billion kronor ($52 billion) to companies via the banks to keep them from “being knocked out as a result of the spread of the coronavirus.”
In a statement, the Riksbank said the ” turbulence on the financial markets means that companies that are essentially robust may experience funding difficulties,” central bank governor Stefan Ingves said.
“It is then important that the banks continue to provide these companies with loans so that the credit supply is not threatened. The measures taken in this situation should be regarded as a form of insurance that enables Swedish companies -— particularly small and medium-sized enterprises – to feel secure that the credit supply will not fail.”
The central bank of non-European Union member Norway said Friday it had decided to reduce the policy rate by 0.50 percentage points to 1%.
European markets have opened mostly higher after a turbulent trading session in Asia.
Shares rose in Paris and London but fell 6.1% in Japan following Wall Street’s biggest drop since the 1987 Black Monday crash.
Friday the 13th brought wild swings for some markets as governments stepped up precautions against the spread of the new coronavirus and considered ways to cushion the blow to their economies.
India’s Sensex gained 4% after plunging 10% when it opened, triggering a brief halt to trading.
U.S. futures were up more than 2% after the Federal Reserve and European Central Bank pledged more support for markets churned by a cascade of shutdowns across the globe.