Chinese financial reforms seek to leapfrog risks

Banks are important, but can be dangerous. Ideally, they should provide important services to a modern economy by helping people save while allocating the resulting capital to the best uses for society and by facilitating transactions.

But, as we've seen repeatedly throughout history, banks create huge risks that can be immensely expensive and cause terrible destruction and societal unrest.

In early July, the People's Bank of China, the central bank, announced a set of banking reforms designed to solve specific problems in the real economy.