Global money supply (M2) is expected to fall starting in early 2017 but China will continue to be awash in liquidity.
Yao Yudong, head of financial research of the People’s Bank of China, used a liquidity model he developed this year to come up with the projection, the Hong Kong Economic journal reports.
The formula is based on discounted M2 of central banks in the United States, Japan, Britain and the rest of Europe.
Yao said that despite the fall in global liquidity, the mainland will have enough cash backed by sufficient collateral.
He warned of increased risks in Brazil, Turkey and other emerging markets.
These countries should speed up debt repayment and resolve imbalances in their financial markets by undertaking structural reform, he said.
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