After some complicated weeks for Chinese economy where they had to assume that their growth will be lower than expected and that they are suffering at bank level the bubble burst , the Popular Bank Of China has spoken.
They have just announced the creation of a guarantee system for deposits with a maximum of 500,000 yuan (aproximately about 65.300). This way, in case of bancarybankruptcy, this amounts will be protected , which would meet the expectations and tranquility 99.6% of current accounts and about 50 % of deposits .
In this case, the mesurement is directly thought to protect the country’s capital because, if this deposits or accounts are in other countries, they won’t be guaranteed as they don’t are part of the territorial capital.
To get the guarantee of this deposits, they will only bank institutions to pay some assurances to a created fund just through an agency. As observers like UBS, Morgan Stanley or Versus Wealth Management say, this is the best way to keep the people calm and to avoid the savings removal because of the fear of loosing them.
Also, see this as a prerequisite for achieving the liberalization of interest rates that bring added balance between small and large entities requirement.
Since now it has been the Chinese Government the one that put in guarantee all these deposits but, with this new policy, the Chinese Popular Bank has found the way toinvolve economic agents themselves on the creditworthiness of a system that has begun to be questioned not only nationally , but internationally .
With the new interest rate policy which began with the new aid measures to the output of economic stagnation , is expected to improve consumption , export, and thus get a new upward trend over the next 2015, but still there are doubts of their achievement if this measure does not follow other expansionist assist the public debt.
The truth is that, the fear of living the same stage as Greece in 2012 has made investors take their money out from Chine and that is one of the reasons of this last measurement, as they want to be able to retain the huge investors that put their eyes in this market.