China's central bank said on Tuesday that banks' reserve requirement ratios (RRR) should be appropriately lowered to ease the burden on the country's financial institutions.
However, as China is still a developing country, it is still necessary to keep the RRR at relatively high levels, the central bank noted.
The People's Bank of China (PBC) also said it is urgent to transform China's monetary policy from a quantity-based mode to a price-based mode, adding that authorities will gradually unify market interest rates, deposit and lending rates.
The PBC in April unexpectedly cut reserve requirement ratios (RRR) for most banks, in a move that was earlier and more aggressive than expected.
Many analysts expect further RRR cuts in coming months as China's economic growth starts to cool under pressure from rising borrowing costs and a regulatory crackdown on riskier lending practices.