Credit Tightening: PBoC Increases Oversight of WMPs

Caixin: China's Central Bank Boosts Oversight of Wealth-Management Products
China's central bank has stepped up risk assessment efforts that will oversee fast-growing, off-the-book wealth-management products, but analysts say the impact will be limited.

Several sources from a sub-branch of the People's Bank of China (PBOC) and commercial banks told Caixin that they had received a notice from the central bank confirming that off-balance-sheet wealth-management products will be incorporated into the Macro Prudential Assessment (MPA) system, a framework adopted by the central bank at the beginning of this year to gauge risks in bank-credit exposure.

The MPA system takes into account several factors, including banks' capital adequacy and leverage ratios; the quality of assets, liquidity and foreign debt risks; and interest-rate pricing. Wealth-management assessment falls under "broad credit loans," a term the MPA adopted to represent loans, bonds, equities and certain other investments.
There's no effect on banks yet, but it paves the way for tougher regulations down the road.

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