China banks told to halt lending to US banks

[girl gone mad]

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.

A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills)

http://www.reuters.com/article/marketsNews/idUSPEK16693720080925

[NMDemDist2]

1. ruhroh

that's not good.

[depakid]

2. RUMOR DEBUNKED

http://www.bloomberg.com/apps/news?pid=20601080&sid=aKww9nMiO5fg&refer=asia

[Mojorabbit]

4. I see hong kong

but nothing re china proper.

On edit I see the article you are talking about. I cannot see them not protecting their assets though.

[mystieus]

3. uh uh... not good

[Skink]

5. That's great.

The markets are fine. Mortages rates are going down. Maybe now Congress can work on a stop gap measure for homeowners without worrying about Wall street.

[tama]

6. No official halting

but many banks halting any way, out of sane and understandable caution:

"Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says

By Kevin Hamlin

Sept. 25 (Bloomberg) -- Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.

``We are in the same boat, we must cooperate,'' Yu said in an interview in Beijing on Sept. 23. ``If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.''

An agreement is needed so that no nation rushes to sell, ``causing a collapse,'' Yu said. Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion. Asian countries together hold half of the $2.67 trillion total held by foreign nations.

China, Japan, South Korea and others should meet soon to seal a deal, said Yu, a former academic member of the central bank's monetary policy committee. The talks should involve finance ministers, central bank governors and even national leaders, he said.

``Whether some kind of agreement between them to continue to hold Treasury bills is viable, I'm not sure,'' said James McCormack, head of sovereign ratings at Fitch Ratings Ltd in Hong Kong. ``It would be unusual. If it became apparent that sovereigns in Asia were selling Treasuries the market would take that quite badly, it's something to be avoided.''"
more: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anZHfo6tQi60