Are China’s Banks Being Overrun by Bad Debts?
The chairman of the Chinese Banking Regulatory Commission, Shang Fulin, urged banks there to continue with financial innovation but to be cautious of risks that exist in the sector, Reuters reports.
In the latest step toward financial reform in China, Shang reiterated calls for on- and off-balance accounts to remain separate. He also argued for segmentation between different types of assets and loans so that regulatory procedures can be more efficiently and effectively implemented in each sector.
The chairman also warned of risks that off-balance loans could impose when not properly managed. Even if they are supervised adequately, he claimed that many risks were being hidden because relationships between interconnected assets and loans were not being considered when analyzing the statuses of such packages.