China’s Central Bank, the People’s Bank of China (PBOC), on Sunday cut the amount of cash that banks must hold as reserves by the most since the global financial crisis just days after a government report showed that economic growth slowed to the lowest level in six years.

The move by the PBOC was the second industry-wide cut in two months and will add more liquidity to the world’s second-largest economy to help spur bank lending and counter slowing growth.

The PBOC lowered the reserve requirement ratio (RRR) for all banks by 100 basis points to 18.5 percent, effective from April 20, according to a statement on its official website http://www.pbc.gov.cn.

Last week the Chinese government announced that economic growth in the first quarter (Q1) of 2015 rose 7 percent from a year earlier, which was the slowest quarterly expansion since early in 2009.

China has set its economic growth forecast for 2015 at “about 7 percent” as it struggles with a property downturn, factory overcapacity, and local debt. A growth rate of 7 percent would be China’s slowest annual rate of expansion in 25 years.

Although “growth in the first quarter met the official target of around 7 percent for 2015, the slowdown in several areas, including industrial output and retail sales, has caused concern,” state-run Xinhua news agency said in a report.

The latest cut by the PBOC was largest single reduction since the global financial crisis in 2008 and highlights stepped up efforts by the central bank to fend off a sharp slowdown in the economy.

The move by the PBOC will free up around $200 billion for banks to lend, the Wall Street Journal (WSJ) said.

“The size of the cut is more than expected,” said Chen Kang, an analyst at Shenwan Hongyuan Securities. “It’s going to release around a trillion yuan (in liquidity) at least.”

The PBOC also announced targeted RRR cuts with an additional 100 basis point cut for rural credit cooperatives and village banks, in addition to a 200 basis point cut for the ChinaAgricultural Development Bank, one of the major policy lenders in China.

The PBOC has cut interest rates twice since November in an effort to lower borrowing costs and boost demand.

The WSJ reports that the PBOC is also considering to allow Chinese banks to swap local-government bailout bonds for cash as a way to bolster liquidity and boost lending.

More from the WSJ:

China’s central bank is considering taking a page from Europe’s financial-crisis handbook to free up more credit as growth in the world’s second-largest economy slows. The proposed strategy would allow Chinese banks to swap local-government bailout bonds for cash as a way to bolster liquidity and boost lending, said people familiar with the People’s Bank of China talks. That strategy is similar to the long-term refinancing operations, or LTROs, used by the European Central Bank, the people said. In late 2011, the ECB doled out trillions of dollars in three-year loans through such mechanisms, providing access to cheap funds for struggling European banks. The Chinese version would be aimed at ensuring adequate liquidity in the system, as the central bank can no longer rely on large amounts of capital inflows to maintain its monetary base. Since late last year, there have been growing signs of money leaving China’s shores. Yuan positions on the PBOC’s balance sheet, a gauge of capital flows, declined a record 251.1 billion yuan, or about $40.5 billion, in the first quarter.

Should the PBOC adapt such a strategy, it would mark a major shift in the central bank’s money-supply policy and would underscore the leadership’s deep concern about missing an already lowered growth expectations, the WSJ said.