China’s PBOC Clarifies Standard Assets as New Regulations Loom

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China’s central bank has clarified the definition of standard assets in the nation’s $14.1 trillion investment-product industry as it moves toward an enforcement deadline.

The People’s Bank of China published draft rules on Saturday to define what qualifies as standard credit assets. These assets refer to fixed-income securities, including government bonds, central bank bills, corporate bonds, debt financing instruments of non-financial firms, as well as negotiable certificates of deposit, according to a statement on the central bank’s website.

The draft guideline for the first time defines standard and non-standard assets, a distinction that lacked clarity previously. The regulations will apply by the end of 2020, after the government extended the deadline from June 30 to explain the rules and give banks more time to comply.

China Defers Deadline to Regulate Asset Management Industry

China has been imposing strict controls on the country’s 100 trillion yuan ($14.1 trillion) asset-management industry as it cracks down on financial risks and tries to contain growth in shadow banking. Regulators previously capped investment in non-standard credit, including for bank wealth-management products, to 35% of the products’ net assets.

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