Central Banks

China central bank cuts reserve requirement ratio by 0.5 percentage points

China cuts reserve requirement ratio

China's central bank, the People's Bank of China, has cut further the reserve requirement ratio, the amount of cash the country's banks have to hold, in an attempt to calm investor jitters over the world's second largest economy.

The PBOC cut the ratio by 0.5 percentage points after the country's markets closed Monday. The cut, which comes into effect Tuesday, means that most large Chinese banks will have a reserve ratio of 17 percent, Reuters reported.

China shares tumble, with Shanghai off 2.9%; Nikkei sheds 1%

This is the fifth time since last February that the PBoC has cut its ratio, the last cut being on October 23.

China's stock markets had another torrid day Monday: The Shanghai composite pared some losses to close down 79.38 points, or 2.87 percent, at 2,687.82 points, after earlier trading down as much as 4.63 percent. The Shenzhen composite slid 93.18 points, or 5.36 percent to 1,643.35 points.

Latest government figures show that the Chinese economic growth rate slowed to a 25-year low of 6.9 percent in 2015 and 6.8 percent in the fourth quarter of last year.

In a statement reported by Reuters, the PBOC said the move was made to ensure ample supply of liquidity in the system.

Saheli Roy Choudhury contributed to this report.

Follow CNBC International on Twitter and Facebook.