Deflation: Interbank Market Lending Contracts

Caixin: Regulator Wins First Round in Clampdown on Interbank Fundraising
In the second week of May, the net amount of funds that banks raised from selling negotiable certificates of deposit (NCDs) was a negative 107.3 billion yuan ($15.6 billion), meaning they paid back more than they borrowed, according to Wind Information, a financial data provider.

That’s the biggest weekly shortfall in net issuance since China introduced interbank NCDs at the end of 2013, and the third straight week of redemptions exceeding new issues, the data show. The amount of outstanding NCDs fell to 7.7 trillion yuan as of May 18 from 7.9 trillion yuan at the end of last month, set for the first monthly drop since November, according to Wind.
Unless there's credit growth elsewhere in the economy offsetting this contraction, the economy will slow later this year.

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