Loan, deposit measures change

The People's Bank of China is changing its calculation of bank deposits and loans as it moves to increase supervision of cash in the banking system amid a resurgence in shadow banking activity.

December loan figures showed that the shadow banking portion of what China calls total social financing was the highest since January 2014, reversing the trend of shrinking off-balance sheet credit seen in most during the last six months of last year.

The steps the PBOC is taking also show that its recent adjustment to how banks calculate their loan-deposit ratios was not a form of monetary easing but rather an initial step to applying further pressure on shadow banking.