Chinese Banks To Stop Loaning to U.S. Banks? (Updated)
The South China Morning Post is reporting that the China Banking Regulatory Commission has instructed Chinese banks to stop loaning money to U.S. banks.
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 CBRC wouldn’t comment, so I can’t guarantee that this is genuine news. However, I can’t imagine that even the rumor of this happening would do too many good things for the financial markets.
UPDATE (Dave Schuler)
Alex beat me to the punch with this story. As I’ve mentioned before the SCMP is generally favorable to Beijing and, presumably, well-connected. My first reaction on reading this story was that it was a trial balloon.