Here's our summary of key overnight news in 90 seconds at 9 am including news China plans to establish more private banks to increase financial support for small firms.
Reuters reports the Chinese Cabinet plans to promote trials to initiate the establishment of private banks responsible for their own risks, as well as financial leasing companies and consumer finance companies and other financial institutions. Maybe there’ll even be a role for the Haier owned Fisher & Paykel Finance?
The Government also says it’ll support the establishment of more village banks and credit companies.
China’s massive state owned banks have channelled most of their borrowing to state firms and local government. China Minsheng Banking Corp is the only private bank among the country's 10 biggest commercial lenders.
Reuters says under the Government's guidelines banks will be encouraged to widen credit securitisation to help channel more credit to small firms and qualified banks will be allowed to issue special bonds and use the proceeds to support smaller firms. Banks will also be encouraged to tolerate higher non-performing loans when they lend to small firms.
Small and medium-sized enterprises comprise 60% of Chinese GDP and 75% of new jobs, but are struggling with weaker global demand and tight credit supply.
Meanwhile, the US government’s budget deficit for the 10 months to July fell 38% from the same period of last year. The deficit narrowed to US$607.4 billion from US$973.8 billion.
For the year to September 30, the Obama administration projects the deficit will shrink to US$759 billion, the smallest one in five years. More tax and payments to the Treasury from Fannie Mae and Freddie Mac as the US housing market improves are helping.
Now for some news on the virtual currency Bitcoin.
New York’s top banking regulator has subpoenaed 22 digital-currency companies as it moves to decide whether new regulations should be introduced to oversee the emerging industry, Bloomberg reports.
Describing virtual currencies as a virtual Wild West for narco-traffickers and other criminals, New York’s Department of Financial Services said it was considering whether it should issue new regulatory guidelines specific to virtual currencies. The subpoenas went to service providers as well as investors in the sector.
The Trade Weighted Index is at 75.25 this morning.