China’s new director of the central bank, Yi Gang, made his first speech in a post on Sunday, pointing out that monetary policy will continue to remain stable and neutral, so as to create a suitable financial environment for supply-side reforms and high-quality economic development, Yicai.com reported.
Meanwhile, Yi also emphasized that the country is facing some potential financial risks, which are mainly reflected in the following:
First, there are still high leverage risks, especially in the state-owned enterprises area. Local government debt, as well as the rapidly growing leverage ratio among residents, are worth attention.
Second, though the trend of shadow banking has been curbed, there are some illegal financial activities operating without obtaining financial licences. These activities have been rapidly expanding in the name of innovation in the age of the Internet.
Third, a few financial holding groups have brought about contagion risks across the industry with problems such as capital absconding, circulating and false capital injections.