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The Chinese Central Bank (PBOC) has responded to calls they should Tighten Monetary Policy Following Warnings on Debt and the World Bank warned on the size of Shadow Banking Of Chinese Debt by drafted new regulations for financial institutions.


 Highlights From New PBOC Regulations

  • Financial institutions will be punished for providing implicit guarantees for asset management products
  • Highly indebted firms will not be allowed to invest in asset management products
  • Financial institutions need provision of 10% of asset management products fee income as risk reserves
  • Financial institutions not allowed to use asset management products to invest in commercial banks' credit assets
  • Financial institutions forbiddon from conducting asset pools to manage asset man products

China Shadow Banking

  • Financial institutions will control leverage levels for asset management products to curb asset price bubbles
  • Non-financial institutions not allowed to issue or sell asset management products
  • The new regulations will come into full affect 30 June 2019
This new regulations all come about after after China's New Politburo Standing Committee came into power at the end of October. There is still 18 months to go befpre the big shifts happen. A lot of wiggle room there.
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