For the first time since the late 1990s, the Chinese government has announced an emergency transfer of public funds to major banks to avoid a crisis of the financial system. Special treasury bonds will be issued to finance this program.
Oku.Az Referring to “Bloomberg”, this was reported by Chinese Finance Minister Lan Foan at a press conference in Beijing.
He did not disclose the specific amount that will be transferred to state banks. The minister stated that only the issuance of state bonds will be significantly expanded.
According to the report, the volume of transfers to support the market is expected to amount to 2 trillion yuan (more than 283 billion US dollars).
This is the first time since 1998 that large-scale transfers of state funds to state banks have occurred in China. At that time, the world was shaken by the global financial crisis. Even the largest Chinese banks are now facing the threat of a severe shortage of funds due to the large volume of non-performing loans due to the structural crisis in the construction and real estate sector. Financial institutions are also suffering a significant drop in revenue due to the central government’s interest rate cuts to stimulate the weak business climate.
China’s Finance Minister said this year’s state budget revenue will be lower than expected and its deficit will be 4.06 trillion yuan ($574 billion).
