中国需要的信贷违约互换 (China should allow CDS)

Bloomberg recently reported that Liang Shidong, Chief Risk Officer of China Bond Insurance Company joined the debate around bringing onshore CDS to the country saying that China should allow credit default swaps to control risk in the banking system.

According to Bloomberg, “We are ready for credit-default swaps and other derivatives,” Liang Shidong said at a forum in Beijing today. “When innovation poses challenges to regulators, regulators should speed up. They can’t just say no.” He further added, “Systemic risk is expanding…The traditional guarantees and collateral don’t work so well. The banks want to have proactive risk control tools like securitization and derivatives.”

Mr. Shidong’s comments come after the recent release of China’s first-half 2010 domestic bond market statistics which saw national debt rise 12% to RMB59.4 billion, local government debt rise 47% to 2.4 billion, central bank debt rise 14% to 47.4 billion, bank debt rise 24% to 55 billion, non-bank corporate debt rise 63% to 32.7 billion, asset-backed securities fall 61% to 113 million and foreign debt rise 33% to 40 million. Overall, all fixed income markets tracked by the National Association of Financial Market Institutional Investors (NAFMII) grew 22% to RMB197.1 billion.

As the statistics indicate, non-bank corporate bonds is the fastest growing sector of China’s fixed income market and the introduction of credit default swaps to the country is seen as an appropriate tool to help meet domestic demand for capital by non-financial firms which have traditionally sought financing in the domestic interbank and loan markets. Analysts believe giving banks the ability to hedge corporate risk with CDS will enable more banks to meet this demand and expand loan volumes in an appropriate (less risky) manner.