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China central bank welcomes new bank regulations
AFP - Tuesday, September 14
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SHANGHAI (AFP) - – China on Monday welcomed a major overhaul of global banking rules, as the Asian nation reportedly considers new moves to strengthen banks' balance sheets after a post-crisis lending spree last year.
Top global central bankers and regulators meeting in Switzerland agreed Sunday on a new set of rules, called Basel III, requiring banks to raise the capital they hold in reserve to prevent a repeat of the world financial crisis.
"This, along with global liquidity standards, will be an important financial reform measure after the financial crisis," the People's Bank of China, the country's central bank, said in a brief statement on its website.
China powered out of the global crisis on the back of a massive stimulus package partially funded by state-backed bank lending, which saw new loans reach 9.6 trillion yuan in 2009, nearly double the total of the previous year.
It has sought to curb rampant lending, urging banks to replenish their capital base and increase the amount of money they must keep in reserve after the lending spree fuelled fears of a bubble in the property sector and a possible new crop of bad debts.
Chinese media said last week the banking regulator was considering a new rule requiring banks to put aside the equivalent of 2.5 percent of their outstanding loans as reserves.
The China Business News, citing an unnamed source, reported on Monday that the regulator plans to introduce a new slew of requirements next year to ensure banks have sufficient capital, provisions and liquidity.
The government has set a loan target of 7.5 trillion yuan for this year, a 22 percent drop from last year.
Chinese banks issued 545.2 billion yuan (80.5 billion dollars) in new loans in August, the central bank said Saturday -- a slight increase from July, and exceeding expectations of economists polled by Dow Jones Newswires.
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