Net financing via interbank certificates of deposit (CD’s) has further declined in 2019, following efforts by the Chinese central bank to better regulate the instruments since 2017.
According to a report from National Business Daily net interbank CD financing fell 57.89% in 2019 compared to the previous year.
Data from Choice indicates that net interbank CD financing in 2019 was 800 billion yuan, as compared to 1.9 trillion yuan in 2018 and 1.71 trillion yuan in 2017.
Interbank CD’s were first launched in China at the end of 2013, and rapidly became a popular means for small-and-medium sized banks to access funds from their larger peers.
In 2015 interbank CD issuance exceeded 5 trillion yuan, while net financing surpassed 2 trillion yuan. In 2016 net financing further rose to in excess of 3 trillion yuan.
Since 2017 the Chinese central bank has sought to better regulate interbank CD issuance, leading to a 1.5 trillion yuan YoY drop in net financing that year
40 banks issued over 100 billion yuan in interbank CD’s in 2019, accounting for 75% of the total issuance volume, while 432 banks issued less than 100 billion yuan in the instruments, for a decline of over 80 lenders compared to 2018.
Interbank Wealth Management Balance Drops 80% Compared to 2016
Over 2100 Foreign Institutional Investors on China’s Interbank Bond Market