Posted on 09/05/2008 3:32:16 AM PDT by TigerLikesRooster
Main Bank of China Is in Need of Capital
By KEITH BRADSHER
HONG KONG Chinas central bank is in a bind.
It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac.
Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central banks tiny capital base. The banks capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from the International Monetary Fund.
Now the central bank needs an infusion of capital. Central banks can, of course, print more money, but that would stoke inflation. Instead, the Peoples Bank of China has begun discussions with the finance ministry on ways to shore up its capital, said three people familiar with the discussions who insisted on anonymity because the subject is delicate in China.
(Excerpt) Read more at nytimes.com ...
Yep, great point!
Nope, see post 15.
bttt
The truth is the Chinese will never openly put this “paper” in the market...not a lot of it anyway...its just a question of value...the more they openly put, the less they will get. You forget that the Chinese still have something to lose here...
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