China Moves on Banking Reforms

China Moves on Banking Reforms

Chinese banking regulators said on Tuesday that the country would remove government limits on the interest rates banks pay on deposits sometime in the next two years. They also said that private businesses would be allowed to open five banks in two major cities and two provinces. Depending on how these changes are carried out (many details are not public), they could significantly shake up the financial system, which is dominated by state-owned banks that primarily lend to inefficient government enterprises and a fast-growing shadow banking system that operates with little regulatory oversight.

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