1 Jul 2013
China top banking regulator says enough liquidity
FXstreet.com (Barcelona) - The Chinese top banking regulatory body appeased fears over the credit crunch in the country, saying that liquidity remains ample for the interbank needs.
Regulators reassured the markets by pledging to tighten risk controls over local government, real estate and shadow banking. The chairman of the China Banking Regulatory Commission, Mr. Shang, said "excess reserves more than double amount necessary", although Shanga failed to provide further details on how they intend to reduce shadow banking practices.
According to Bloomberg, citing Shang Fulin, "Banks had about 1.5 trillion yuan ($244.4 billion) of cash reserves as of June 28 that could be used for payment and settlement needs, more than double what is usually required."
Mr. Shang added that “The tight liquidity condition on the interbank market has been easing in the last few days", reassuring that "This type of situation won’t affect the banking sector’s smooth operations.”
The comments from Mr. Shang follow a pledge from the People’s Bank of China governor Zhou Xiaochuan, who said last June 28, that the Chinese financial marketplace will not be disrupted by the liquidity deficiencies. The calmed approached by Chinese top decision-makers aided Chinese bank stocks, one of the best performing sectors end of last week.
“Some people have compared our local government debt to European debt, but there’s a big difference -- our debts are accumulated for production not for consumption -- most of them have assets as guarantees and the overall risk is controllable,” Shang said, cite by Bloomberg.
Regulators reassured the markets by pledging to tighten risk controls over local government, real estate and shadow banking. The chairman of the China Banking Regulatory Commission, Mr. Shang, said "excess reserves more than double amount necessary", although Shanga failed to provide further details on how they intend to reduce shadow banking practices.
According to Bloomberg, citing Shang Fulin, "Banks had about 1.5 trillion yuan ($244.4 billion) of cash reserves as of June 28 that could be used for payment and settlement needs, more than double what is usually required."
Mr. Shang added that “The tight liquidity condition on the interbank market has been easing in the last few days", reassuring that "This type of situation won’t affect the banking sector’s smooth operations.”
The comments from Mr. Shang follow a pledge from the People’s Bank of China governor Zhou Xiaochuan, who said last June 28, that the Chinese financial marketplace will not be disrupted by the liquidity deficiencies. The calmed approached by Chinese top decision-makers aided Chinese bank stocks, one of the best performing sectors end of last week.
“Some people have compared our local government debt to European debt, but there’s a big difference -- our debts are accumulated for production not for consumption -- most of them have assets as guarantees and the overall risk is controllable,” Shang said, cite by Bloomberg.