Xia Bin Deconstructs China's Systemic Financial Risk

Economic Observer: Chinese Academy of Social Sciences scholars say China systemic risk "is a small probability event." Do you think China will inevitably erupt into systemic risk?

Xia Bin: I think that in our government the problem of systemic risk is not taken lightly, and not as relaxed as the American scholar saying that "this time is different." On policy, I had proposed in 2014, "needs a very unusual times" policy, the central bank must be made to understand the issue so that the whole community bank epidemic is ample signal. In fact, in recent years, our monetary policy is loose, so we will not break out US-style financial crisis, the bank debt crisis does not occur. But this does not mean that there is no systemic risk problems, especially now that the rapid development of financial markets, credit transaction structure shadow complex, wary of risk, so the market is trading profound understanding. The reason why we did not erupt systemic risk, because we have taken a number of countries in post-crisis relief and resolve to take policy, monetary policy is loose; because some administrative intervention, to prevent banks pressing for repayment and pulling loans, so that enterprises didn't closed and go bankrupt. Therefore, the analysis of systemic risk, not simply still look current NPL ratio. You know, in general, a high-NPL ratio is often not produced before the crisis, but after the crisis.
EO asks about the bond market:
Economic Observer: The economy is facing downward pressure, this year's bond market is also a credit event frequently, ask specific risks of systemic risk in the end how to resolve? How the government, regulators to resolve the credit default risk?

Xia Bin: For these questions, I had to go to the beginning of "Thirteenth Five Period prevention awareness and the idea of ​​systemic risk," an article said that at present we have to be careful, the risk of a variety of economic entities, may end up concentrated expression of financial risk. Payment problems due to the rigidity of the various types of market players remain unresolved, whether it is the current local debt risk, the risk of shadow banking, mutual interconnection risks, trust banking risk or the risk of bankruptcy state-owned loss....risk is often easy to focus on...." Moreover, since the local financial risk, financial institutions risk, currency risk (devaluation) as well as social stability risk sticking together, plus the large magnitude of financial risks, transmission speed, non-linear characteristics of the outbreak, in fact, difficult to distinguish between regional risk and differences in systemic risk, it is easy to lead to the state's financial risk global.

Inventory risk how to resolve? I have said four pinciples should be followed, "staunch the bleeding, socialization, cost, time." I firmly believe that from a global perspective, as long as we control the cost of new debt, less than economic growth (eg 6%), then remained stable solvency. Therefore, under the premise of trying to control the cost of debt, the debt stock of the huge risks that already exist, should share the risk in principle to close the loopholes, and then carry out banking, business, personal, central and local governments, through the extension of time is gradually digested.

For the prevention of incremental risk, removing the outer surface of the reform measures of the real economy and monetary policy factors, we must resolutely implement the principle of breaking down the rigidity of payment. Implicit state guarantees in disguise - rigid payment principle remains unbeaten, which is today's China market default "hidden rules", is so far the various risks of debt is one important reason why the higher base, the system is triggered one of the important main cause of risk. This is the principle to be established, is the most basic principles of anti-incremental risk.
There's little evidence his advice is being followed in terms of keeping debt costs below economic growth rates, particularly if you don't believe the official GDP number. Staunching the bleeding, socialization and buying time, however, are all undertaken at various times.

EO: 谏言者夏斌:解构中国系统性金融风险

No comments:

Post a Comment