Regulator claims Chinese banking system is stable

1 July 2013

The banking system in China is stable, according to the country's financial regulator.

This is despite the ongoing fears of a credit crunch, which has stifled the nation's financial markets.

Concerns over bad bank loans led to Chinese stocks falling to a four-and-a-half-year low last week, with global markets also dropping as a result.

However, the head of the China Banking Regulatory Commission Shang Fulin said: "The issue with tight liquidity in the interbank market has started to ease."

The Far Eastern nation is anxious bad loans may impact its economy and has been attempting to impose more discipline on its banks as a result.

Institutions in China - led by the state-owned firms - lent out massive sums of money to help maintain the country's rapid growth rate after the global financial crisis.

The main worry surrounds property, where the availability of easy money may have created asset bubbles.

Should China's growth slow too quickly some borrowers may struggle to repay some of these loans.

By Asim Shah

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