BEIJING (Reuters) – China will pay closer attention to the influence of non-bank financial institutions on financial stability, and the impact of local policy interventions on broader global markets, according to a central bank working paper published on Tuesday.
In recent years non-bank institutions such as trust and investment companies, or fund and asset management firms have expanded their activity – much of it a less regulated form of lending – even as policymakers have tried to rein in leverage in the Chinese economy.
“Though banks still dominate China’s financial system, non-bank financial institutions have considerable influence as well,” the paper published on the People’s Bank of China website said.
“We believe that sufficient attention should be given to international spill-over effects of intervention policies, and the impact of non-bank financial institutions to financial stability,” it said.
The paper analyzed the impact of changes in China’s stock market and financial sector on developed countries – the United States, Britain, Germany and Japan.
“China’s financial sector exerts considerable influence on global financial markets, especially on the Japanese financial sector,” it said.
The central bank has gingerly raised short-term rates recently to contain financial risks and encourage companies to deleverage, though economists expect authorities will move cautiously to avoid hurting economic growth.
(Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Will Waterman)