The move, which will take effect on Dec. 25, will push the ratio to a 20-year high of 14.5 percent, after it reached a ten-year high of 13.5 percent on Nov. 26.

   This is the country's tenth rise in the reserve requirement ratio this year. It is aimed at "strengthening liquidity management in the banking system and checking excessive credit growth", the People's Bank of China said in a statement posted on its website.

   The move follows the government's announcement at an annual economic conference concluded on Dec. 5, which said the country would shift its monetary policy stance from "prudent", an approach it has followed for the last ten years, to "tightening".

   It is the first time China has raised the reserve requirement ratio by as much as one percentage point since September 2003. The other nine rises this year were half a percentage point each.

   It means that a tighter monetary policy has been adopted, said Song Guoqing, Professor of the Peking University.