Ex-PBOC Official Warns of Interbank Rates Being Low for Too Long
- Nation’s seven-day repo rate slid to two-year low this week
- Cheap funding may drive firms to leveraged bond trading: Sheng
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China’s economy will face increasing risks if interbank borrowing rates stay too low for too long, a former central-bank official says.
Excessively cheap funding costs may drive more financial institutions into leveraged bond trading, where they borrow more short-term cash to invest in longer-maturity debt, said Sheng Songcheng, previously head of the statistics and analysis department at the People’s Bank of China.