China interbank market freezes

[Unbeatable]

It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation's banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China's Shanghai Composite -2.5% at seven-month lows.

http://www.zerohedge.com/news/2013-06-19/china-interbank-market-freezes-overnight-repo-explodes-25

I remember that I looked back at the headlines in the weeks leading up to the banking crisis so that I would be familiar with warning signs, the sharp rise in interbank lending rates was one of it not the big one.

 

[Unbeatable]

Bank Of China Declares Moratorium On Transfers, Online Banking; Counters Inoperable.

http://www.zerohedge.com/news/2013-...-transfers-online-banking-counters-inoperable

10:00 many, many people began to receive messages sent to the Bank of China, "the end result of the Bank of China Bank failures, bank customers can not carry on through the Bank transfers, please Bank online banking, bank counter or use of other bank transfer system, Bank system will be restored promptly notify you." large number of transfer business banking needs of the people turned to online banking, counter, but according to the instructions of the public still found text messages can not handle.

The translation is bad so I'm not sure exactly what's up, but could be bad.

As for speculation that the crash might be the last two days the inter-bank "money shortage" relevant, ICBC has denied

 

[DSAbug]

What happens when 1/5 of the world's population has their banking system blow up on the same day? Clearly this is a bearish development for gold /sarc

 

[Unbeatable]

Exactly and I'm sure if it is indeed blowing up, it will affect us all even more than that.

The Central Bank's central bank, 'BIS' has also said the party is over in the last few days.

http://www.zerohedge.com/news/2013-...ettlements-warns-monetary-kool-aid-party-over

This may mean they (western central banks) are no longer willing to send any more central bank gold from West to East to make up for in the shortfall in supply, interesting week ahead...

 

[Unbeatable]

I see there is some speculation that this is a US cyber attack, but from the Chinese based users on ZH, the rumour is that this a system upgrade after the Snowden leaks.

OK. I am based in China.

There's a strong rumour that this kind of system glitch was the system upgrade.

Most of the Chinese banks were using CISCO cables and after the snowdon leaks, Beijing decided to change all these system to Huawei.

 

[benjamen]

http://finance.yahoo.com/news/china...Rwc3RhaWQDBHBzdGNhdANob21lBHB0A3BtaA--;_ylv=3

"The Chinese central bank's hands-off approach to the credit crunch facing lenders, which pushed short-term interest rates to record highs last week, could pose a serious threat to the financial system in the world's second largest economy."

 

[Unbeatable]

http://www.zerohedge.com/news/2013-06-26/chinese-banks-stop-lending-due-liquidity-freeze

A number of banks have temporarily halted lending to businesses and individuals apparently due to mounting pressure from liquidity shortages.

They include some branches of Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC), sources from the two banks said.

"All of our loans have been put on hold," the source said, "There may be some credit line when it comes to July, but it will definitely be used up in a few days."

& as the author of the article writes

t's not the loan halt that is an issue for banks. It is when they have to do the same to deposits. The good news at least for now, is that the Chinese population hasn't figured out that as the PBOC undergoes an ad hoc $1 trillion deleveraging, a like amount of deposits will be impaired. But just like Russians in Cyprus, they will. Eventually.