Watchdog warns banks on rising liquidity risk

China's top banking watchdog said yesterday that the nation's commercial lenders had maintained ample liquidity so far, but warned rising liquidity due to record lending this year could pose a risk to the banking system as a whole.

As of the end of September, banks' average liquidity ratio, or cash held by these banks as a proportion of deposits, was 41.7 percent, well above the industry requirement of 25 percent, the China Banking Regulatory Commission (CBRC) stated on its website yesterday.

"Chinese banks' liquidity is high at present, and there is plenty of money in the inter-bank lending market," it said, but underlined the necessity of enhancing liquidity risk management against the backdrop of the global financial crisis.