Credit crunch

China’s credit crunch deepens as PBoC ignores call to action

Financial stress is spreading out from China’s interbank market and threatens the real economy. Rates analyst notes signs of intervention.

The credit crunch in the Chinese interbank lending market ratcheted tighter on Thursday after policymakers signalled that the central bank wouldn’t always be the lender of last resort.

China’s State Council met Wednesday and said it will maintain prudent monetary policy while accelerating interest rate and capital account liberalisation.

“The statement sent a clear signal that no monetary easing will come in the near term,” said J.P. Morgan in a note to clients. The tough line prompted a spike in interbank funding costs.

While the central bank refuses to unleash more liquidity on demand, the stress in the interbank market is spilling over into...

¬ Haymarket Media Limited. All rights reserved.

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222

Article limit is reached.

Hello! You have used up all of your free articles on FinanceAsia.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences. To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222