The PBoC, the liquidity squeeze and market liberalisation

Hui Feng

June 2013 is bound to be an extraordinary page in China’s modern economic and financial history. Both Chinese bankers and international investors were stunned to witness what should have been a modest liquidity shortage quickly escalate into a credit crisis in China’s interbank market. By June 20, the Shanghai interbank overnight rate soared to a record 13.4% from as low as 2.1% in early May. The pain in the interbank market quickly spilled over to other parts of the financial world, triggering

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