China changing Money management System
2023.02.19 05:54
China changing Money management System
By Ray Johnson
Budrigannews.com – In an effort to better prevent risks in the country’s financial system, the banking regulator and the central bank of China plan to implement a more differentiated regulatory system for evaluating the risk management and capital adequacy of commercial banks.
Saturday, the People’s Bank of China and the China Banking and Insurance Regulatory Commission jointly released revised draft rules with the stated goal of “continuously improving the precision of risk measurement and guiding banks to better serve the real economy.”
Lenders will be divided into three groups based on business size and risk level in the proposed rules, which bring the banking industry closer to global standards.
Banks will be subject to a distinct regulatory system under the rules. Lenders with relatively large cross-border businesses or assets will have to meet more stringent capital requirements and provide regulators with more information.
In addition, the types of properties, sources of repayment, and loan-to-value ratios that are used to measure banks’ risk exposure to mortgage lending will be included in the regulations.
The weak demand and increasing debt defaults by developers have slowed China’s property market, which was once a growth engine.
According to the two regulators, the banking sector’s capital adequacy ratios would remain largely unchanged following the implementation of the new rules, though some banks’ ratios would slightly shift.
Before the changes go into effect on January 1, 2024, the commission and the central bank are asking the public for feedback.
