China’s $40 Trillion Banking System Learns a Lesson on Risk
- China jolted markets by imposing losses on Baoshang creditors
- Breaking of implicit guarantee could help reduce moral hazard
A pedestrian passes in front of a Baoshang Bank branch in Beijing on May 28, 2019.
Photographer: Giulia Marchi/BloombergThis article is for subscribers only.
Two months after China shocked investors with the first government seizure of a bank in two decades, market confidence in the nation’s smaller lenders has yet to fully recover.
That may be just what the country needs.