People’s Bank of China crackdown on bank lending looks good for long term stability
Despite causing a market panic and having to slightly amend its original policy statement, PBoC stands firm on making changes to the way banks in the country do business.
Two weeks ago, China’s interbank liquidity appeared to suddenly dry up, sending investors into a blind panic across the globe. According to an article written by Standard & Poor’s researchers Qiang Liao and Liang Zhong, “Tight Interbank Liquidity Test China’s Delicate Dance Between Bank Discipline and Stability”, the weighted average of the overnight borrowing rate among the country’s banks increased to 13.8% on June 20th 2013, a jump of 610 basis points from a day earlier, or 1,050 bps from a month ago.
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, Risk and Regulation
, Standard & Poor’s
, Zhang Ziwei
, Liquidity Risk