CASS warns of ‘shadow banking’ risk to China’s financial system
Print Edition
China’s vast “shadow banking” sector is now valued at US$4.4 trillion, according to the Chinese Academy of Social Sciences, the government’s premier research group, as it warned of potential risks to the financial system.
The shadow banking system is worth 27 trillion yuan (US$4.4 trillion), equivalent to nearly one fifth of the domestic banking sector’s total assets, according to a report by the Institute of Finance and Banking under CASS.
The figure is slightly lower than an earlier estimate by ratings agency Moody’s, which put shadow banking activities at US$4.8 trillion in 2012, more than half of the country’s gross domestic product.
“What matters most is not the scale of the shadow banking system,” CASS said in a statement yesterday.
“Once big risks arise from the shadow banking system, they could rapidly spread to the banking segment and the real economy through the monetary and credit markets, posing systemic financial risks,” it said.
China’s financial markets were rocked by several debt defaults earlier this year.
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