It was just a matter of time until the relentless pressure imposed by Chinese regulators on the shadow banking system took their toll on the country’s financial system. In the aftermath of Fed Chairman Ben Bernanke’s game-changing press conference in which he unveiled plans to draw-down quantitative easing, interbank lending rates in China spiked, raising the financing costs dramatically which will ultimately force deleveraging across the system. Interestingly, this is a self-inflicted wound, as the administration of Premier Li Keqiang attempts to tackle the problems that could lead to a financial crisis.
|