China’s banking regulator is pressuring banks to curb reliance on short-term borrowing and control risks from off-balance-sheet lending, according to a document obtained by Reuters, following two severe cash crunches in the last six months.
While China is pushing to reduce systemic risks posed by the rise of shadow banking, analysts say its focus is on curbing the riskiest off-balance-sheet lending practices rather than ending the practise altogether.
The China Banking Regulatory Commission (CBRC) has set up a leadership group on banking industry reform headed by its chairman Shang Fulin, according to a source close to the regulator.
“The CBRC is requiring banks … to push forward reform in the two areas of wealth management and interbank business,” the source told Reuters, requesting anonymity because he was not authorized to speak publicly.
“The commission will come up with a reform plan in the first quarter and preliminary results on these two focal points of reform should be evident by the end of June.”
The document is the text of a speech delivered by CBRC Vice Chairman Zhou Mubing at the agency’s annual work meeting on January 7. The 15-page speech was officially distributed as a circular to banks the following day.
via Reuters
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.