China allows trusts, insurers into interbank market

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BIZCHINA / Center

China allows trusts, insurers into interbank market

By (Bloomberg)
Updated: 2007-07-09 16:17

China will allow trust companies, financial leasing firms and insurers to
borrow from each other for the first time, as it seeks to develop an
interbank market where trading surged 10-fold over the past decade.

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Auto financing firms and insurance asset management units will also be
allowed in the interbank market, effective August 6, the People's Bank of
China said in a statement on its Web site.

China established the interbank lending market in 1996 and by the end of
last year, it had 730 members, including domestic and foreign banks as
well as securities firms. Trading totaled 2.15 trillion yuan ($283
billion) in 2006.

Banks can borrow for as long as one year while leasing and insurers can
borrow for up to three months. For brokerages and trust companies, the
limit is seven days, according to today's statement.

The central bank in January started publishing a new benchmark rate for
borrowing between banks, known as the Shanghai interbank offered rate, or
Shibor, moving toward a more market-driven financial system.

China has been relaxing controls on interest rates as part of efforts to
develop its capital markets and reduce reliance on administrative edicts
to manage the economy.

(For more biz stories, please visit Industry Updates)

20071123 Extracted from http://www.hellomandarin.net