Shares of Chinese banks in the Shanghai market took a hit this morning. The central bank has decided to include margin deposits in the basis for calculating reserve requirements. A measure that is equivalent to an increase of 150 basis points in the rate – already the highest in the world – of the reserves that banks must hold with the central bank (margin deposits are equal to about 700 billion dollars). These measures are aimed at moderating banks' lending activity by reducing available liquidity.
Meanwhile, in Greece, bank shares instead moved upwards with surges not seen for twenty years, thanks to the merger decisions between some large banks in view of a recapitalization. Similar increases, for similar reasons, were recorded in Cyprus, which represented another 'soft underbelly' of finance in the euro countries, given the disproportionate weight of the banking sector in the local economy.
Source: China Daily, Bloomberg
