China’s central bank sought to reassure money market traders that a spike in short-term interest rates does not signal a dramatic tightening of liquidity, sources said, in an apparent move to avoid a repeat of a credit panic that roiled markets in June.
The People’s Bank of China also warned against “excessive leverage”, or borrowing, that would leave banks overexposed to sudden spikes in demand for cash, said the sources, who attended a closed-door meeting between a PBOC official and traders from major financial institutions late last week.
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Weihao Cao and Kevin Yao, Reuters via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/naiuzD_yvJI/
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