Resource shares supported the Sydney market, and the Australian dollar jumped briefly, after China's Xinhua news agency said the People's Bank of China would boost liquidity via its reserve requirement ratio.

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In regards to leverage, Basel III introduced a minimum 3% leverage ratio and two required liquidity ratios: (1) the Liquidity Coverage Ratio, which requires a bank to hold high-quality liquid assets to cover its total net cash outflows over 30 days, and (2) the Net Stable Funding Ratio, which requires the available amount of stable funding to exceed the required amount of stable funding over a one-year period of extended stress.

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"The reserve ratio rise is a signal that the central bank is still in liquidity tightening mode and is very keen to control loan growth, " said a trader at a European bank in Shanghai.

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Mr. Chidambaram's comments add support to the view among some investors and analysts that the central bank will also cut banks' cash reserve ratio to help banks tide over the liquidity crunch.

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