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APAC Economist on China’s economy

| Nov 24, 2019

Alicia Herrero, chief APAC economist at Natixis, talks on Bloomberg about China’s economy, and the People’s Bank of China’s (their Central Bank) new swap facility. What is interesting about this facility is that it creates CNY liquidity initially via perpetual bonds and eventually allowing these bonds to be swapped for other debt instruments . The aim is to encourage banks’ lending in China, shore up bank capital and keep interest rates low (by setting the bond interest rates at a low rate of 4.50% saving as a broader signal). This is essentially, in spirit, if not in letter, a TARP (troubled assets relief program, USA GFC, 2008) and TLTRO  (Europe, Greece, Spain,Italy crisis, 2011/2012 and continuing) rolled into one.

Source & Full article – https://www.bloomberg.com/news/videos/2019-01-27/china-s-fiscal-situation-has-worsened-natixis-says-video

 

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