Supervision of shadow banking pressing
Print Edition
Supervision and risk analysis are urgently needed on China’s shadow banking businesses, a central bank official said yesterday.
Sheng Songcheng, financial survey and statistics chief at the People’s Bank of China, said his team has been negotiating with other government departments on improving statistical work, research and analysis on shadow banks.
“No matter which department or agency the supervision work falls to, it must take full responsibility,” Sheng said.
The supervisory work aims to guide shadow banks to better serve the real economy with risks contained, he said at a press conference in Beijing.
The official’s remarks came after media focus in the past week about a yet unconfirmed government document that targets greater supervision of shadow banking businesses.
The document classified the existing forms of shadow banking businesses in the country and specified the supervisory body under a specific case, aiming to put on hold growth in financial risks.
The businesses, which include Internet finance companies, third-party wealth management institutions, finance guarantee companies, micro-credit firms and other intermediaries, operate with low supervision or no supervision, the document said.
Analysts said shadow banks can guarantee money supply amid tight liquidity, but it involves risks.
“Shadow banks are closely related with trust companies and banks. About a quarter of their loans might have gone to the real estate industry and more than half of the remainder might be related with local government debts,” said Zhao Qingming, a professor at Beijing-based University of International Business and Economics.
The central bank’s Vice Governor Pan Gongsheng said earlier that local governments have turned to more expensive lending offered by shadow banks because of stricter requirements on banks lending to local government financing vehicles.
“When property prices suddenly fall or debt risks in local regions break out, the risks of shadow banks will emerge,” Zhao said, adding that he believes authorities will take timely measures to address potential problems regarding shadow banks.
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