China’s bank regulator warned of threat to financial stability

Beijing. January 18. Silkroadnews - China’s bank regulator warned a “black swan” event could threaten financial stability, CNBC reported.
Guo Shuqing, the head of the China Banking Regulatory Commission, warned that a “black swan,” or an unforeseen event could threaten the country’s financial stability. In an interview with official People’s Daily he said that while risks in the financial system are manageable, they are still “complex and serious,” the report said.
Since his appointment to the post of the head of China’s banking regulator in the beginning of last year, Guo has introduced many new rules regulating the lendor’s risks, from restrictions on shadow banking to combating loan fraud.
Guo said that the dangers are related to the pressure of growing bad debts, imperfection of internal risk systems at financial institutions, relatively high level of shadow banking and rule violations.
All these risks can affect financial stability through a “black swan” type event, Guo said, referring to major unexpected occurrences.
This year, China will strengthen its control over the banking sector to reduce financial risks, however, long-term efforts would be needed to control the chaos of the banking sector.
“Black Swan” is a theory that considers hard-to-predict and rare events that have significant consequences. The author of the theory is Nassim Nicholas Taleb, who in his book “The Black Swan: The Impact of the Highly Improbable” introduced the term of the “black swan” event.