Thursday, March 27, 2008

PBOC warns risks in banking system

The People's Bank of China (PBOC), China's central bank, warned in a report that Chinese banks should strive to keep a sound system, as the financial risks would concentrate in the banking system.

The domestic companies depend too much on bank loans, reflecting the undeveloped corporate direct financing market, said the bank in the report.

The major fluctuations, emerging in China's property and stock prices, would hit financial stability and deserve close observation, said the bank.

While the developed economies grew at a slower pace in 2007, the emerging markets and developing economies have remained a fast growth. Meanwhile, hedge funds and sovereign funds are playing an increasingly pivotal role in the world financial market.

The bank estimated that turbulence in the financial market, global disparities, rising crude prices would constitute major risks in future world economy, while the high-flying crude and metal prices would remain, and fluctuations in financial markets would persist.

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