Via Capital Economics:
Earlier this week, the People’s Bank vowed to do more to regulate asset management products. While it is wise to seek to defuse the risks from these products sooner rather than later, doing so without triggering financial volatility will be no easy feat given the scale of banks’ off-balance sheet exposures.
In its annual financial stability report published on Monday, the People’s Bank (PBOC) acknowledged the risks posed by asset management products (AMPs) and promised tougher regulation. AMPs include wealth management products but also an array of other products issued by securities firms, fund companies and insurers. They have been a key driver of the growing off-balance sheet exposures of Chinese banks, which sell the products to households in return for fees paid by the issuers.
