FRANKFURT, March 3 China's shadow banking sector
contains clear risks that financial authorities there are trying
to manage without upsetting the broader economy, Bank of England
Governor Mark Carney said.
China's financial regulators are trying to crack down on
explosive growth in complex interbank transactions used to evade
lending restrictions so as to curb excess credit growth and
prevent a debt crisis as China's economy slows.
The push by the authorities comes as banks have found ways
to expand credit through shadow banking channels that have
raised concerns over the potential for systemic risk.
"Shadow banks play a considerable role in China and the
structures there contain clearly discernable risks," Carney told
German business daily Handelsblatt, which printed his comments
in German in its Monday edition.
Carney chairs the Financial Stability Board (FSB), the
regulatory task force for the Group of 20 economies (G20).
Asked whether China's financial supervisors had recognised
the shadow banking risk, Carney replied: "They have recognised
the risk and are trying to manage the problem such that the
country's development does not suffer."
Turning to global central banking, Carney said national
central banks should pay attention to the consequences of their
decisions for the world economy.
"The (U.S.) Fed already pays attention to what happens in
other parts of the world," he said.
"But like all of us, it has a legal mandate.
"However, I think all central bankers should pay attention
to the consequences their decisions have for the world economy.
Furthermore, we showed in times of crisis that we can work well
together - for example with coordinated interest rate cuts."
(Writing by Paul Carrel; Editing by Catherine Evans)