Chinese Investment Manager Says Shadow Banking Fears Overblown

Concerns about shadow banking in China are overblown, the chairman of China Investment Corporation (CIC) which is responsible for managing some of the country’s massive currency reserves, told CNBC.

“The issue of shadow banking in China has been exaggerated. Yes there are issues, but on the whole the financial system in China is sound,” CIC chairman Ding Xuedong, told CNBC on the side lines of the St Petersburg International Economic Forum in Russia.

Shadow banking refers to how financial intermediaries create credit in ways that may be overlooked by government regulation.

Often these financial instruments are highly complicated and unregulated and the growth of their use in China in recent years has raised concerns about the financial risks facing the world’s number two economy.

“The shadow banking over there is potentially 2007 all over again if things don’t go properly,” Art Cashin, director of floor operations at UBS, told CNBC Thursday.

via CNBC

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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