How would this action pump money into the financial system

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An article on Bloomberg.com reported in 2012 that the People's Bank of China "cut the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in growth is deepening." What monetary policy tool did the People's Bank of China use to "cut the amount of cash that banks must set aside as reserves." How would this action "pump money into the financial system to support lending"?

Reference no: EM131023239

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