The required deposit reserves held with the People's Bank currently earn interest at 1.89% a year and any amount in excess of that earn 0.99%. These interest rates are significantly lower than the one-year time deposit rate of 2.25%, although demand deposits are paying only 0.72%. And reserve money constituted around 11% of total assets of the deposit money banks at the end of 2005. On top of this, another 11% or so of assets was in the form of central bank bills and treasury bonds currently earning around 2.5% on average, which is only slightly higher than the one-year time deposit rate. In order to make money, banks need to keep the lending rates high to compensate for the reduced earnings arising from the Deposit Reserve Requirement Ratio.