Central Bank Governor Zhou Says Not to Worry about ABS in China

The ABS market is quite small in China and risks can be prevented through better oversight and transparency, Central Bank Governor Zhou Xiaochuan said during a press conference on March 12th, on the sidelines of the National People’s Congress.

Concern is rising in China about bad loans amid the country’s economic slowdown, and that ABS might transfer risks in non-performing assets to other market. Zhou tried to dispel concerns related to the risks of a booming ABS market by saying this is a relatively new area China is exploring but that it has learned important lessons from the latest global financial crisis. China has adopted a cautious approach and is looking at sound projects with controlled risk, he said.

In China, ABS sales surged 41 percent last year to 397 billion yuan ($61 billion), according to Bloomberg-compiled data, and yet the volume was only a fraction of the U.S. market.

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