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PBOC says banking system has adequate liquidity
By Hu Xiaocen |
June 24, 2013, Monday
|
Online Edition
Online Edition
THE People's Bank of China said there's enough liquidity in the banking system and lenders should strengthen risk control and liquidity management to maintain financial market stability, a signal the central bank does not plan to inject funds.
"At present, the overall liquidity in the banking system is at a reasonable level," the central bank said in a statement published on its website today. "Because of many changing factors in the financial markets and the first half year is drawing near, the requirements in liquidity management for commercial banks have become higher."
The PBOC also asked lenders to focus on activating the use of granted credit to support economic development, according to the statement.
The overnight Shanghai Interbank Offered Rate, a measure of liquidity in the money market, fell for the second straight day today after it reached a record high last Thursday.
Although the rate has fallen from the record high, it was still at an elevated level compared with rates that had been consistently below 5 percent before the liquidity squeeze, Hu Bin, senior analyst at Moody's Investors Service, said in a credit outlook report today.
"We regard China's latest moves as credit positive for the health of the Chinese banking system overall," Hu said. "We interpret this development as having been the result of a conscious decision by the central bank not to accommodate money markets at a time of seasonal tightness as a means to curb China's credit growth."
However the report also pointed out the entailed risks for lenders, particularly smaller ones. Non-performing loans are expected to rise more rapidly in the coming months given more challenging refinancing conditions.
"At present, the overall liquidity in the banking system is at a reasonable level," the central bank said in a statement published on its website today. "Because of many changing factors in the financial markets and the first half year is drawing near, the requirements in liquidity management for commercial banks have become higher."
The PBOC also asked lenders to focus on activating the use of granted credit to support economic development, according to the statement.
The overnight Shanghai Interbank Offered Rate, a measure of liquidity in the money market, fell for the second straight day today after it reached a record high last Thursday.
Although the rate has fallen from the record high, it was still at an elevated level compared with rates that had been consistently below 5 percent before the liquidity squeeze, Hu Bin, senior analyst at Moody's Investors Service, said in a credit outlook report today.
"We regard China's latest moves as credit positive for the health of the Chinese banking system overall," Hu said. "We interpret this development as having been the result of a conscious decision by the central bank not to accommodate money markets at a time of seasonal tightness as a means to curb China's credit growth."
However the report also pointed out the entailed risks for lenders, particularly smaller ones. Non-performing loans are expected to rise more rapidly in the coming months given more challenging refinancing conditions.
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