China's Shadow Banking: Bank's Shadow and Traditional Shadow Banking

Guofeng Sun

No 822, BIS Working Papers from Bank for International Settlements

Abstract: Banks' shadow, or money creation by banks beyond traditional loans, plays an important role in China's money-creation process, posing a number of challenges to monetary policy operations and financial risk management. This paper analyzes the money-creation mechanisms of China's shadow banking sector in detail, provides accurate measurements, investigates its effects on financial risk, and surveys recent regulation. To strengthen supervision, China's regulators should closely track the evolution of various shadow banking channels, both on- and off-balance sheet. Specific macroprudential regulation tools, such as asset reserves and risk reserves, should be applied separately to banks' shadow and traditional shadow banking.

Keywords: banks' shadow; traditional shadow banking; credit money creation; bank accounting; regulation (search for similar items in EconPapers)
JEL-codes: E44 E51 G28 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2019-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cna, nep-mac, nep-mon, nep-pay, nep-rmg and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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