China Banking Regulator To Crack Down on Shadow Banking Products

The China Banking Regulatory Commission (CBRC) will require banks to report detailed information on their holdings of wealth management products beginning in 2014, four sources with direct knowledge of the new regulations told Reuters on Friday.

Wealth management products (WMPs) are short-term investment products that Chinese banks market to clients as a higher-yielding alternative to traditional bank deposits. They have become a crucial element of China’s shadow banking system, which analysts warn has contributed to excessive debt growth that has led to a build-up of financial risk.

Many WMPs are recorded off-balance-sheet and are used to finance lending to risky sectors such as real estate developers and local governments, to which banks are otherwise discouraged from lending.

via <a href=”http://www.reuters.com/article/2013/11/22/us-china-banks-regulations-idUSBRE9AL0BS20131122?feedType=RSS&feedName=businessNews”>Reuters</a>

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza