China Banking Stress Climbs to Record
A warning indicator for China banking stress rose to a record high in the first quarter due to a rapid build up of the Chinese corporate debt. China’s credit-to-gross domestic product “gap” stood at 30.1 percent, the highest for the nation in data stretching back to 1995, according to the Basel-based Bank for International Settlements.
“China’s credit-to-gross domestic product “gap” stood at 30.1 percent, the highest for the nation in data stretching back to 1995”
~ Bank for International Settlements
Readings above 10 percent signal elevated risks of banking strains, according to the BIS, which released the latest data on Sunday While the BIS says that credit-to-GDP gaps have exceeded 10 percent in the three years preceding most financial crises, China has remained above that threshold for most of the period since mid-2009, with no crisis so far.
About Bank for International Settlements
Established on 17 May 1930, the Bank for International Settlements (BIS) is the world’s oldest international financial organisation. The BIS has 60 member central banks, representing countries from around the world that together make up about 95% of world GDP. The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People’s Republic of China and in Mexico City. The mission of the BIS is to serve central banks in their pursuit of monetary and financial stability, to foster internationalcooperation in those areas and to act as a bank for central banks.
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