Bank of China ran out of money

Discussion in 'China' started by Armand2REP, Jun 22, 2013.

  1. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

    Dec 17, 2009
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    Bank of China commits monetary default amid fund shortage

    Xinhua 2013-06-21


    Bank of China, the country's leading commercial bank, has denied a media report claiming the bank had defaulted earlier on Thursday.

    The bank's statement came after the official Sina Weibo account for 21st Century Business Herald said the bank had defaulted on Thursday afternoon, deferring transactions for half an hour due to a fund shortage, citing anonymous sources.

    The bank responded in a post on its official Sina Weibo that it has never had monetary defaults and had completed all outbound payments on Thursday in a timely manner.

    The bank also said that the rumors are "seriously unfounded" and the bank reserves the right to pursue legal action against those who started the rumors out of malicious intent.

    Recent interest rate increases in China's inter-bank market have raised market concerns over a liquidity crunch.

    The Shanghai Interbank Offered Rate overnight rate surged 578.40 base points to 13.44% on Thursday, and fixing repo 7-day, another gauge of interbank interest, gained 292.9 base points to 11%.

    However, the central bank issued three-month bank bills worth 2 billion yuan (US$324 million) on Tuesday and Thursday, respectively, missing market expectation over large-scale liquidity injection.

    The State Council, or China's cabinet, said at a meeting on Wednesday that the government will maintain a prudent monetary policy with reasonable scale of monetary aggregates.

    Bank of China denies monetary default amid fund shortage rumor|Markets|Business|
  3. amoy

    amoy Senior Member Senior Member

    Jan 17, 2010
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    Another hearsay?

    Hong Kong
    Last edited: Jun 22, 2013
  4. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

    Sep 28, 2011
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    North Carolina, USA
    Historically, banks running out of money close first, don't they?
  5. mylegend

    mylegend Regular Member

    Nov 30, 2011
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    China Central Bank PBOC Faces Fallout of Self-Made Cash Crisis -

    China's central bank is wrestling with a liquidity crunch of its own creation.

    A cash shortage that has sent short-term interest rates as high as 25% earlier this week and alarmed the world's markets, eased a bit Friday. Traders said the People's Bank of China, may have asked big state banks to refrain from hoarding cash and release more funds to ease the liquidity squeeze. But the top priority for the central bank, acting on instructions from China's political leadership, continues to be taming runaway informal lending.

    China's campaign to tame runaway credit may be too aggressive, critics say, creating as many problems as those it is trying to solve and raising the risk that the world's second-largest economy will face continuing turmoil and slow growth.

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