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- Govt. urged to boost direct fundraisings
Date: 12-Jun-2007 Sources: (Shenzhen Daily)
THE government should take advantage of the country's flush liquidity conditions and low interest rates to boost non-bank financing as a way of developing more mature financial markets, a senior central banker wrote yesterday.
Domestic firms have long relied too heavily on bank loans as a source of funding, sparking concern that the nation's lenders are carrying too much risk even as some are still struggling with a legacy of bad loans.
Ma Delun, assistant governor of the People's Bank of China, wrote in the People's Daily that abundant capital and low rates were creating opportune conditions for companies to raise funds cheaply and directly in domestic financial markets.
The government should do more to spur direct financing by taking a number of steps, including allowing firms to issue bonds without having to secure bank guarantees for all bond issues having maturities of more than one year, Ma said.
The suggestion was in line with pledges to facilitate easier access to the market by the National Development and Reform Commission (NDRC), the country's top economic planner and a supervisor of the corporate bond market.
The government should also allow financial institutions to be able to securitize a broader range of assets that were underpinned by stable capital flows, he wrote.
To help boost the nation's fledgling capital markets, Ma said the government should allow institutional investors such as securities brokers, insurers and pension funds to invest in a wider range of products.
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