China's central bank governor promised today to ensure there is enough money in financial markets to maintain stability after a credit crunch sparked fears of a possible crisis.
In his first public appearance since the credit crunch, Zhou Xiaochuan said in a speech in Shanghai that financial markets have adequate liquidity for normal activity. He did not mention last week's abrupt spike in interest rates but promised to ensure adequate credit.
Interest rates paid by banks to borrow from other banks jumped last week from their normal level of 2-3 percent to a record 13.4 percent when demand for loans outstripped supply and the central bank did not intervene to provide extra funds.
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The rate spike triggered a tumble Monday in Chinese stock prices on fears the country might face a credit crisis but markets later recovered most of their losses.