Monday, June 10, 2013

'Inverted' Short-Term Chinese Interest Rates

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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