China central bank looks to tamp down liquidity-crunch speculation

10/29/2013 | Reuters

An official of the People's Bank of China reportedly met quietly with traders from major financial institutions to reassure them that a spike in short-term interest rates does not indicate sharply reduced liquidity. The session also included a warning against too much leverage. "The message from the PBOC is the same as last time [during the liquidity panic in June]: warning banks against building up too much leverage. But the central bank has been clearer this time around by reassuring the market that if participants do underestimate market conditions, it will come to the rescue," said a money dealer at a foreign bank in Shanghai.

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