“Everyone is talking about credit – about the credit cycle, leverage and credit-quality problems. It’s a big black box, and it’s quite scary.” Stephen Green, Head of Greater China Research at Standard Chartered The summer shockwave that hit China’s interbank market this year served as a rude awakening to all participants. Both Bank of China and China Everbright Bank were beset by rumors of a serious liquidity crunch. The two ended up issuing very public denials that they were in any danger of a cash shortage. A full-on crisis was finally averted as the People’s Bank of China (PBOC) injected liquidity into the market and signaled a willingness to establish a deposit insurance system. However, Chinese banks took away a hard-earned lesson: PBOC was ready to shut down the entire banks and bring the flow of credit to a screeching halt in order to curb irresponsible lending.
Crouching Bankers, Hidden Opportunity
Crouching Bankers, Hidden Opportunity
Crouching Bankers, Hidden Opportunity
“Everyone is talking about credit – about the credit cycle, leverage and credit-quality problems. It’s a big black box, and it’s quite scary.” Stephen Green, Head of Greater China Research at Standard Chartered The summer shockwave that hit China’s interbank market this year served as a rude awakening to all participants. Both Bank of China and China Everbright Bank were beset by rumors of a serious liquidity crunch. The two ended up issuing very public denials that they were in any danger of a cash shortage. A full-on crisis was finally averted as the People’s Bank of China (PBOC) injected liquidity into the market and signaled a willingness to establish a deposit insurance system. However, Chinese banks took away a hard-earned lesson: PBOC was ready to shut down the entire banks and bring the flow of credit to a screeching halt in order to curb irresponsible lending.