China should accelerate private bank development: Central bank governor
SHANGHAI (REUTERS) - China needs to do more to develop private banks and make asset securitisation a standard practice as it tries to strengthen its financial system, central bank governor Zhou Xiaochuan wrote in an article on the official People's Daily website.
The report comes as Beijing moves to tap private capital to head off any need to bail out its banking system for a second time in as many decades, which many already see as inevitable.
Another bailout would be considered a major failure of reform efforts over the past 10 years and would also risk further encouraging risky and wasteful investment by local governments if their current debts were written off.
Mr Zhou argued China should accelerate efforts to open up the financial system so it was better able to cope with economic shocks, including by allowing more private-sector participation in the banking sector to create a level playing field between small and large financial institutions.