China Central Bank Tightens Loan, Deposit Measurement As Shadow Banking Surges – Yahoo Finance

Regulators have signalled concern that a massive stock market rally set off in November is at risk of over-heating, given large quantities of cheap leverage provided through brokerage margin accounts. The transcript quoted comments by Sheng Songcheng, the head of the PBOC’s statistics department, during a question-and-answer session to which foreign media were not invited. “The changes in calculating deposit and loan items are aimed at making (Chinese standards) gradually be in line with usual international practices,” Sheng was quoted as saying. “As these changes are aimed at more accurately reflecting the reality of social deposits loans, as well as liquidity conditions, people should not read too much into them on the policy front.” Despite the crackdown, off-balance sheet lending led by entrusted loans and trust loans shot up in December, official data showed on Thursday, even as traditional yuan loans fell far short of expectations. “Shadow banking is back with a vengeance, and I’m not sure why the year ended this way but it’s clear that there is a lot of money creation outside of the banking system,” Dariusz Kowalczyk, an economist at Credit Agricole CIB.
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