Secondary Loan Market Initiated in Shanghai

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In an effort to lower risks and help Chinese banks meet new capital requirements, the CCPC has begun allowing financial institutions to sell loans to other banks.  Dubbed the Interbank Loan Transfer System and launched in Shanghai today, it is designed to improve overall monetary policy and tighten up control in the financial sector in general.In an effort to lower risks and help Chinese banks meet new capital requirements, the CCPC has begun allowing financial institutions to sell loans to other banks.  Dubbed the Interbank Loan Transfer System and launched in Shanghai today, it is designed to improve overall monetary policy and tighten up control in the financial sector in general.Last years mountain of new loans, over 9 trillion RMB, has caused uneasiness in Beijing due to the possibility of bad loans in the real estate and infrastructure sector.Beijing has clamped down on lending by raising capital requirements for banks and by limiting the investors in second or third properties by significantly raising down payment requirements.  They also ordered most SOE out of the real estate market to stop the bidding up of prime land in first tier and second tier cities.It is estimated that over 25% of loans extended to local governments to build infrastructure projects have already turned sour and local media is filled with debates about the true extent of the problem.

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