Sub Categories: » HOMEPAGE / ECONOMY/ ECONOMICS
Tuesday, September 13 2011 , Your time is 15:58:00
HONG KONG - Reuters
China’s financial system is at risk from bad loans, booming private lending and sharp falls in property prices, the International Monetary Fund (IMF) warned yesterday, as it called for sweeping reforms.
In its first formal evaluation of China’s financial system, the IMF blamed heavy government involvement in the country’s banks and watchdogs for reducing market discipline and corporate governance.
The Fund called on Beijing to relax its control of its currency, the yuan, and allow the central bank more freedom over policy decisions.
Rampant lending since the 2008 financial crisis has left many companies and local governments in China with huge debts.
While China’s financial sector was “robust overall”, inefficient credit allocation and other weaknesses needed to be addressed, said Jonathan Fiechter, deputy director of the IMF Monetary and Capital Markets Department “While the existing structure fosters high savings and high levels of liquidity, it also creates the risk of capital misallocation and the formation of bubbles, especially in real estate,” said Fiechter
Daily News - Follow us on