China cbank warns high financial risks amid rising economic headwinds (updated)

Bank of Jinzhou Co

25/11/2019 12:27

(Adds details, background)
    BEIJING, Nov 25 (Reuters) - China needs to resolve
outstanding financial risks, and must counter risks from
"abnormal" market fluctuations that stem from external shocks,
said the central bank on Monday, as Beijing prioritises
financial stability amid increasing challenges. 
    Financial markets are highly sensitive to global trade
situations and rising uncertainties in global liquidity, said
the People's Bank of China (PBOC) in its annual financial
stability report, adding that it will step up real-time
supervision on stock, bond, foreign exchange markets to prevent
cross-sector risk contamination.
    Bond defaults may continue, so authorities must prevent the
risks of such defaults from triggering systemic risks, it said,
while penalties on regulatory violations in the securities
market would be increased.
    Beijing has stepped up daily supervisions and assessment on
potential "black swan" and "grey rhino" events that may occur in
the future and has prepared contingency plans, as downward
pressure on the economy rises, said the PBOC.
    The central bank reiterated that it would maintain a
proactive fiscal policy and a prudent monetary policy, as well
as implement greater tax cuts and increase the issuance quota
for local governments' special bonds used to fund infrastructure
projects by a large margin.
    Looking ahead, the PBOC will tailor its credit supply to
better boost the economy and strike a fine balance in achieving
growth and fending off risks. 
    "Overall speaking, China's financial risks have been slowly
resolved but the risks are still abundant, after accumulating
rapidly in the past few years," said the PBOC. It added that
potential risks and problems will be difficult to eliminate in
the short term. 
    

 (Reporting by Stella Qiu, Cheng Leng and Huizhong Wu; writing
by Se Young Lee; Editing by Toby Chopra and Ed Osmond)
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