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China central bank says debt, financial risks under control 

June 28, 2016

Ben Blanchard, Reuters

China's debt and financial risks were under control, the central bank said on Monday, adding that it would continue to implement prudent monetary policy and proactive fiscal policy.

In its 2016 financial stability report, the People's Bank of China said it would also keep yuan interest rates at a reasonable level.

"Overall credit risks are under control, non-financial corporate debt risks are rising," it added.

The central bank said it would also "comprehensively" use monetary policy tools, including open market operations, reserve requirement ratios and re-lending to keep liquidity ample.

Global investors are increasingly worried that Beijing's continued efforts to stimulate economic activity and hit growth targets are driving debt up to unsustainable levels, raising risks to the banking system.

A much-promised campaign to reduce industrial overcapacity could add to the dangers of more bad loans and defaults, while deleveraging - reducing debt burdens - could further weigh on companies and the economy. Read more

 
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