Is China on the Verge of a Major Cash Crunch?

The Ministry of Finance has auctioned off debt, but only two thirds of the debt was bought, does this create a drop in available cash the country has on hand? This is the first time in 23 months that China was unable to sell the debt that is up for auction.

There are numerous other sign’s the country is entering a cash crunch, seven-day rates that banks use to exchange cash between one another have more than doubled recently. While no word has come from the Central Bank of China as to weather the bank will cut interest rates, as many regional banks have begun to do leaving the banks reluctant to lend.

The cash crunch is an indirect cause of the nations economic slow down. Things continue to get worse and it all depends on when the central bank will have to consider monetary easing. While it’s not time to panic just yet, keep your eyes open to up and coming economic data.

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