China Acts to Boost Loans, Bolster Flagging Economy

SHANGHAI (Reuters) - China's central bank cut the amount of cash that banks must hold as reserves on Saturday, freeing an estimated 400 billion yuan ($63.5 billion) for lending to head-off the risk of a sudden slowdown in the world's second-largest economy.

China's central bank cut the amount of cash that banks must hold as reserves on Saturday, freeing an estimated 400 billion yuan for lending to head-off the risk of a sudden slowdown in the world's second-largest ...

Reuters - China's central bank cut the amount of cash banks must hold in reserves on Saturday, boosting lending capacity by an estimated 350-400 billion yuan ($55.6-$63.5 billion) in a bid to crank up credit creation as the world's second-biggest economy faces a fifth successive quarter of slowing growth.

Beijing (AFP) - China's central bank on Friday unexpectedly cut benchmark interest rates for the first time in more than two years, as authorities seek to prop up flagging growth in the world's second-largest economy.

China's central bank cut the amount of cash that banks must hold as reserves on Saturday, in another attempt to head off a sharper slowdown in the world's second-largest economy.

The Ponzi schemes and off-balance sheet loans in China's banking system are in the forefront of today's news. Reuters reports Bank of China executive warns of shadow banking risks A senior Chinese banking executive has warned against the proliferation of off-book wealth management products, comparing some to a Ponzi scheme in a rare official acknowledgement of the risks they pose to the Chinese banking system.

Chinese stock have been on a 2-day tear as Premier Wen Jiabao has come flat out in support of the stock market. Moreover, money supply in China is up the most since last April and new Chinese loans exceeded the estimates of all 18 Bloomberg economists. M2 rose 13.6 percent, the fastest pace since July. Bloomberg reports China Stocks Rise Most in 3 Months on Loan, Money Data

Two years ago, Zero Hedge first made the observation that the bulk of Fed reserves (also known simply as "cash created out of thin air" because money is first and foremost fungible no matter what textbook theoreticians may claim, and the only cash allocation preference is the capital allocation IRR analysis) had been pa