So how do you like it now that China has Ordered a Halt Interbank Deals with U.S. Firms?
Mainland Lenders Ordered to Halt Interbank Deals with U.S. Firms
By Jane Cai and Adam Chen
South China Morning Post, Hong Kong
Thursday, September 25, 2008
http://www.scmp.com
BEIJING — Mainland regulators have told domestic banks to stop lending to United States financial institutions in the interbank market in a bid to prevent possible losses during the financial crisis, industry sources said yesterday.
The ban from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to US banks but not to banks from other countries, a source said.
The CBRC was not available for comment yesterday.
The decree appears to be Beijing’s first attempt to erect defences against the deepening US financial meltdown after the mainland’s major lenders reported billions of US dollars in exposure to the credit crisis.
Lending transactions on the mainland interbank market totalled 10.65 trillion yuan (HK$12.17 trillion) last year, according to the People’s Bank of China.
In the first eight months of this year, transactions totalled 10.11 trillion yuan, up 104 per cent from a year earlier.
At the end of last year, the mainland interbank market had 717 members, including banks, securities companies and trust companies.
Another banking source said the CBRC issued the ban after obtaining data about the exposure of mainland banks to bonds issued by bankrupt Lehman Brothers Holdings.
Top officials said they were keeping a close watch on the crisis and warned mainland financial institutions to be cautious in their daily business and overseas expansion.
“The international transaction volume of Chinese banks is not big. Those concerning subprime loans are probably lower than US$10 billion,” deputy central bank governor Ma Delun wrote this week in the China Business Post, a People’s Bank of China-affiliated newspaper.
But the deteriorating situation in the US has shocked top officials.
Mr Ma said that among the unexpected developments was the effect the crisis was having on normal assets, not just problematic assets; its impact on the whole credit market, not just single products; and its effect on Europe and other nations, not only the US.
The exposure of seven listed mainland banks to bonds related to Lehman Brothers totalled US$721 million.
Mainland banks had US$9.8 billion in exposure to US subprime loans at the end of last year and US$25 billion to Fannie Mae and Freddie Mac by June 30.
Tags: Adam Chen, Bank Of China, central bank governor, china, China Banking Regulatory Commission, China Business, China Morning Post, Chinese Banks, Credit Crisis, Deals, Domestic Banks, financial meltdown, Firms, Halt, Interbank, Interbank Market, International Transaction, Lehman Brothers, Lehman Brothers Holdings, Like, Ordered, Overseas Expansion, Securities Companies, South China Morning, South China Morning Post, South China Morning Post Hong Kong, Subprime Loans, U.S.Posted in
This is exactly why we don’t need a world bank or the “New World Order” or adopt the Euro.
I’m not sure how I feel about that to be honest. It could go two ways. They are basically just trying to top the bleeding on their end because they have so much in it. Cut the losses and then get back in the game. They make too much from us. They need us like we unfortunately rely heavily on them. For now.
This comes as no surprise to me. I tend to believe that this has much to do with a recent deal that we’ve made and are planning on following through with, having to do with weapons sales to Taiwan:
Washington — The Bush administration announced plans Friday to sell up to $6.5 billion in arms to Taiwan, a decision sure to anger Taiwan’s rival China and one that could complicate stalled North Korean disarmament efforts.
The announcement of the package, which includes Apache helicopters and Patriot III missiles, came in a notification to Congress posted on the Defense Security Cooperation Agency Web site. The State Department said lawmakers, who were expected to leave Washington on Friday to campaign for November elections, have 30 days to comment on the proposed sale. Without objections, the deal would proceed.
The arms package enjoys support among senior lawmakers, who were briefed on the deal by administration officials. China, however, vehemently opposes the provision of weapons to Taiwan.
This is not the greatest site as a source, but all you have to do is google this and you’ll find plenty more.