“BEIJING—China is expected to soon kick-start a trial program that would allow banks to turn loans into securities and free up funds for lending at a time when Beijing is seeking ways to bolster growth.
The securitization program could remove as much as 50 billion yuan ($7.9 billion) worth of loans from balance sheets, according to senior Chinese banking executives. Endorsed by China’s banking regulators and the Ministry of Finance, it represents another step in China’s efforts to revamp its creaky financial system into one that relies more on market forces.
It also comes as Chinese authorities are stepping up efforts to fight a deepening economic slowdown amid the intractable European debt crisis, which has hurt China’s exports. Early this month, China cut interest rates for the first time since 2008, and loosened controls on banks’ lending and deposit rates.”
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