People's Bank of China released over $190 bn for lending

The central bank of China has released extra money for lending as the government tries to reassure the public if real estate developers' $310 billion debt collapses.

The People's Bank of China told the media that it has released up to $190 billion for lending by reducing the amount as reserves. This initiative was expected for Evergrande after the company warned that it might run out of cash to pay debts.

According to the economists, the Community Party can avoid a credit crunch but send a wrong signal by bailing Evergrande to force companies to cut down their debt.

The central bank of China told the media that it wants to support the development of a real economy and lower the finance costs for businesses. It added that the reserve cut shows no change from its prudent monetary policy.

Reducing financial risks is a priority for Chinese officials. The first bond default for the communists occurred in 2014. Since then, defaults have increased in hopes of forcing borrowers and investors to be more disciplined.

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