From the South China Morning Post, March 10:
- Shadow
banking refers to financial activities conducted by unregulated lending
institutions or off-balance-sheet activities by traditional financial
institutions
- Wang Zhaoxing, vice-chairman of the China Banking and Insurance Regulatory Commission, considering ‘benefits the real economy’
China
might allow a return of some shadow banking operations as long as their
lending “benefits the real economy” and does not support speculation,
according to a senior banking regulator.
The
move could relieve some, if not most, of the funding squeeze facing
smaller private firms but would also be an step back from the
government’s deleveraging campaign to reduce debt and risky lending to
help stabilise growth.
“We
need to have an accurate understanding of shadow banking. For those
[institutions] whose financing benefits the real economy and which have
good internal risk controls, we may continue to allow them to exist and
support them,” Wang Zhaoxing, vice-chairman of the China Banking and
Insurance Regulatory Commission told the South China Morning Post on the sidelines of the annual National People’s Congress (NPC) in Beijing on Saturday.
Wang
said regulators were trying to distinguish between good and bad shadow
banking operations, and would tighten oversight of “unhealthy shadow
banks” whose lending “doesn’t enter the real economy but only results in
adding leverage”.
“We
have to strike a balance between risk control and support for the real
economy,” Wang said. “We have requested that commercial banks enhance
their risk controls, and to offer loans to healthy private firms as well
as small and micro businesses that are in real need of the loans.
“We
have to tighten controls over speculative real estate loans and prevent
loans from entering real estate through other shadow banking channels.”...
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