The Chinese way of containing 'financial disorder'

A decade after the 2008 Global Financial Crisis or GFC, the upswing in the financial cycle has reversed direction, reigniting discussions about systemic risks, empirical researchers said.

When the upswing makes way for a downswing, the positive effects of rapid expansion of credit and rising asset prices (which typically boost economic growth), too, will likely yield to debt burdens, potentially having a strong negative impact on the overall economy, or even resulting in recession, they said.

It has been just eight months since Zhou Xiaochuan, former governor of China's central bank, warned about the "Minsky Moment", a point in a financial cycle that could trigger sharp market correction after a period of over-optimism in "good times".