China: Shadow Banking to Help Curb Risks

China may include shadow banking, property financing and internet financing in its macro-prudential assessment to help curb risks, vice central bank governor Yi Gang said in remarks published on Monday, CNBC reported. Chinese policymakers have been trying to contain financial risks and slow an explosive build-up in debt without stunting economic growth. “We will further improve macro-prudential policy framework, explore ways to include shadow banking, real estate financing and internet financing,” Yi wrote in China Finance, a publication under the People’s Bank of China. The central bank will also include interbank certificates of deposit and green credit in its MPA reviews and improve its counter-cyclical adjustments on capital flows, Yi said. Since the first quarter of 2017, the central bank has included banks’ off-the-balance-sheet wealth management products—part of the sprawling shadow banking sector, in its examination of broad credit in its MPA risk-tool. China’s financial deleveraging has pushed up money market rates, bond yields and corporate funding costs as broad M2 money supply growth hit a record low of 8.2% last year—well below the official target of around 12%.