Free Republic

In the anatomy of an economic crisis, a bank run is the point of no return. Bank runs occur when people scramble to withdraw cash from banks in fear of collapse. In the worst cases, banks’ liquid cash reserves are exhausted, not everyone gets their money and the bank defaults. It’s a grim scenario which, fortunately, has occurred rarely in history. The most significant bank runs in the United States took place during the 1930’s Great Depression. More recently, there were runs on numerous U.S. banks during the Financial Crisis in 2008. In Asia, bank runs have also been rare....

China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis, according to early warning indicators released by the world’s top financial watchdog. A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late. The Bank for International Settlements warned in its quarterly report that China’s "credit to GDP gap" has reached 30.1, the highest to date and in a different league altogether from any...

The Federal Reserve has approved applications by three big Chinese government-controlled banks to set up branches and take stakes in US banks after deciding they were adequately regulated in their home market. The US central bank said Industrial and Commercial Bank of China (ICBC), the biggest bank in China and 70.7pc owned by the government of China, will become a bank holding company. In addition, China Investment Corporation (CIC), an investment vehicle set up by the Chinese government to invest its massive foreign exchange reserves, and another company that CIC controls called Huijin Investment will be allowed to become bank...