China’s Markets Are Very Unstable. Its ‘Shadow Banks’ Are Not Helping.

Big Think's chief economist discusses the fledgling Chinese shadow banking system that national leaders want to regularize.

Daniel Altman: For many years financial markets have been regulated in terms of the amount of interest that can be charged on loans and the types of securities that can be offered by different entities whether loans have collateral or not. All of those things are heavily regulated in China. And this has led to what’s called a shadow banking system where there are billions and billions of dollars being lent out through non-bank institutions to make business possible where the supply of regulated credit is insufficient. China wants to regularize this shadow banking industry. It wants to bring it into the formal sector, but to do that they’re gonna have to slowly start to liberalize these other regulations that have been constraining that sector. And this could be quite a disruptive process because every time they liberalize one of the asset classes, a certain type of loan or security, all of the returns on that asset class will change and there will be shifts in where credit is available in the market. This is part of their overall economic reform plan; it’s part of what they’re seeking to do to open up their capital markets further to make their currency a convertible currency that can be used freely in international markets and move across its borders freely. But it’s going to take time and it will have disruptions along the way.

Big Think's chief economist discusses the fledgling Chinese shadow banking system that national leaders want to regularize.

LinkedIn meets Tinder in this mindful networking app

Swipe right to make the connections that could change your career.

Getty Images
Sponsored
Swipe right. Match. Meet over coffee or set up a call.

No, we aren't talking about Tinder. Introducing Shapr, a free app that helps people with synergistic professional goals and skill sets easily meet and collaborate.

Keep reading Show less

In a first for humankind, China successfully sprouts a seed on the Moon

China's Chang'e 4 biosphere experiment marks a first for humankind.

Image source: CNSA
Surprising Science
  • China's Chang'e 4 lunar lander touched down on the far side of the moon on January 3.
  • In addition to a lunar rover, the lander carried a biosphere experiment that contains five sets of plants and some insects.
  • The experiment is designed to test how astronauts might someday grow plants in space to sustain long-term settlements.
Keep reading Show less

A world map of Virgin Mary apparitions

She met mere mortals with and without the Vatican's approval.

Strange Maps
  • For centuries, the Virgin Mary has appeared to the faithful, requesting devotion and promising comfort.
  • These maps show the geography of Marian apparitions – the handful approved by the Vatican, and many others.
  • Historically, Europe is where most apparitions have been reported, but the U.S. is pretty fertile ground too.
Keep reading Show less

Love in a time of migrants: on rethinking arranged marriages

Arranged marriages and Western romantic practices have more in common than we might think.

Culture & Religion

In his book In Praise of Love (2009), the French communist philosopher Alain Badiou attacks the notion of 'risk-free love', which he sees written in the commercial language of dating services that promise their customers 'love, without falling in love'.

Keep reading Show less