PBOC clears way for asset securitisation
The People's Bank of China (PBOC) said yesterday it would push forward with plans to introduce credit asset securitisation into financial markets, which would help banks broaden their range of lending. Asset securitisation is a tool of structured finance in which various assets are pooled together and transformed into marketable securities.
Beijing pledged to further reform capital markets to help redistribute liquidity in the financial system and cut the risk of a repeat of the lock-up in wholesale lending that sent shockwaves rippling through the country's financial markets late last month.
The People's Bank of China (PBOC) said yesterday it would push forward with plans to introduce credit asset securitisation into financial markets, which would help banks broaden their range of lending. Asset securitisation is a tool of structured finance in which various assets are pooled together and transformed into marketable securities.
"Securitisation of credit assets is a way that allows banks to revitalise existing credits," Xie Duo, director of the central bank's financial markets department, said at a media briefing.
If commercial banks were able to securitise their credit assets, they would have more room to provide financing to the market, in particular to support small- and medium-sized enterprises and the agricultural sector, Xie said. His comments echoed those in a State Council statement before the briefing that promised innovation in the financial sector to aid economic reform.
A trial of credit asset securitisation started in 2005, Xie said.
"Commercial banks now have enough experience to cope with possible risks arising from securitisation," he said. "It's time to move forward from being a trial to something routine."