HeF

Is There More Trouble Brewing in China?

I think you're getting your multiplier wrong because you assume that minimum reserve levels in the US and China are similar. Cutting the reserve from 6% to 5% increases the multiplier from 16.7 to 20. Cutting it from 18% to 17% increases it from 5.6 to 5.9. In the end it probably doesn't matter anyway. The contraint on lending now isn't the minimum reserve requirment but rather bank unwillingness to lend, so the multiplier effect will be even lower.