Chinese interest rates and banking sector show a
possible liquidity squeeze. As Chinese growth slows down, banking sector may begin calling in loans. From the Sober Look link:
A spike in short term rates could dramatically dampen bank lending and slow growth even further. A prolonged spike could even put China into a recession. Many are hoping that the PBoC will deal with this issue aggressively by injecting more liquidity into the banking system in order to reduce the risk of a major credit contraction.
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