China's banking watchdog warns Fed easing risks financial crisis – BBG

Bloomberg has reported that the Federal Reserve’s unparalleled stimulus risks plunging the world into financial crisis.

Lead paragraphs

The Federal Reserve’s unparalleled stimulus risks plunging the world into financial crisis according to the chairman of China’s banking watchdog, who also warned that bad debts at Chinese financial institutions could balloon significantly this year due to the impact of COVID-19.

'In an international monetary system dominated by the US dollar, the unprecedented, unlimited quantitative easing policy of the US actually consumes the creditworthiness of the dollar and erodes the foundation of global financial stability,' said China Banking Regulatory Commission Chairman Guo Shuqing.

Guo Shuqing's comments

The world may once again be pushed to the verge of a global financial crisis.

For China’s financial sector, “after the Black Swan of the virus pandemic, asset quality will inevitably deteriorate.

The article comes on the heels of a similar warning from Guo in an interview with Xinhua, where he cautioned that easy access to funding could spark a reemergence of financial irregularities and that China should make preparations to deal with a rise in non-performing assets.

Market implications

Cryptos and gold would be underpinned by such sentiment while, for the meantime, the dollar struggles to sustain a meaningful recovery from the early August lows and lowest levels since May 2018.