China $7b shadow banking industry threatens economic stability: FSB

Shadow lenders in the country account for about 15% of global high-risk non-bank loans.

Bloomberg reports that China’s growing shadow banking industry – which accounts for a whopping $7t of $45.2t in global banking assets – are tied to a global supply of credit that pose high systemic risk to economic stability, according to a report from the Financial Stability Board.

This comes as the country’s central bank issued a slew of regulations in a bid to rein shadow banking activity after tightening rules on the $102t yuan asset management business. 

The guideline aims to unify rules covering asset management products issued by banks, trust firms, insurance asset management comapnies, securities firms, funds and futures companies and close loopholes that allow such arbitrage to occur.

Here’s more from Bloomberg.