During the Central Economic Work Conference this month, China decided to keep monetary policy "prudent and neutral" and ensure stable liquidity in 2017. There will be more emphasis on preventing and controlling financial risks, especially asset bubbles.
There will be more emphasis on preventing and controlling financial risks, especially asset bubbles.
There will be more emphasis on preventing and controlling financial risks, especially asset bubbles.
What risk are we referring to? If it is systemic risk, it can also come from overseas. For China, the asset bubble concerns have been there for quite some time. The banking system is the main contributory factor to the systemic risk we have in mind. If the banking system is well regulated, there is no issue. Controls like LTV, asset collaterals and capital adequacy are important signposts. Monetary policy like interest rates setting are not effective in controlling asset bubbles. In the past, increasing the interest rates will lead to a burst of the bubble. First, asset prices will nose dive because of the sensitivity of interest rates to asset prices. This will aggravate the LTV and economic activity which will compound an already fragile banking system.
Olatunji A Shobande
Just look at any of papers on my papers in (International Review of Economics and Finance (IREF) . It is an A+ journal or see Journal of Business and Economic statistics or Southern Economic Journal or International Trade Journal -- All A+ rank
An interesting issue, because currently interventionist, anti-crisis monetary policy is one of the main pillars of development programs aimed at maintaining the optimal level of credit risk and other categories of financial risks in the state's financial systems and in the commercial banking sector in the situation of a strong decline in the economic growth of the national economy caused by development SARS-CoV-2 Coronavirus pandemic causing Covid-19 disease.
Regards
Dariusz Prokopowicz