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China's government is issuing new regulations to contain risks in liquidity across the banking sector, according to China's top banking regulator Friday.
Banks are facing rising credit and liquidity risks in the financing of loans to local governments and in the real estate market, Shang Fulin, chairman of the China Banking Regulatory Commission (CBRC) wrote in an essay published in Qiushi (Seeking the Truth) Magazine of the Central Committee of Communist Party of China.
"CBRC is working on new liquidity risk rules based on international standards, and will regulate bank deposits and loans more strictly," he wrote.
The CBRC will also apply new regulatory parameters, such as the liquidity coverage ratio, which sets the standards on highly liquid assets held by banks to meet short-term obligations, and net stable funding ratio, which measures medium and long-term funding of the assets of banks.