China Plans to Add Off-Book Wealth Products to Risk Assessment

  • PBOC official speaks in Q&A with the central bank’s newspaper
  • ‘Risks are hidden in some bank businesses,’ the official said

The People’s Bank of China will include wealth management products held off bank balance sheets in its framework for gauging risk to the financial system starting in the first quarter, according to a newspaper controlled by the central bank.

Rapid growth of the products can pose risks to the economy and stepping up monitoring is necessary to more comprehensively evaluate the potential threat, the Financial News reported Monday, citing an unidentified official at the monetary authority.

"Risks are hidden in some bank businesses," the official said. The wealth products should be included because they aren’t much different from other credit assets and they offer guaranteed payments, the official said in a Q&A-format exchange published on the paper’s website.  

Adding the products to the central bank’s calculations could help to emphasize requirements for lenders to limit dangers and maintain sufficient capital. President Xi Jinping and his top economic policy makers pledged Friday to prevent and control financial risk next year and provide prudent and neutral monetary policy, according to a statement issued after the close of their three-day Central Economic Work Conference in Beijing.

Bloomberg News reported in October the PBOC is conducting a trial WMP monitoring under its Macro Prudential Assessment system built on examining banks’ capital adequacy ratios.

— With assistance by Yinan Zhao

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