China’s central bank chief on Sunday called for greater transparency in Chinese public finances, saying their murkiness means investors underestimate the risks of local government debt. Zhou Xiaochuan, governor of the People’s Bank of China, said at a seminar hosted by the Group of Thirty in Washington that prices of Chinese municipal bonds are distorted by lending to local governments by state-owned financing firms, The Wall Street Journal reports. “This kind of distortion makes the financial sector underestimate the risk of local government fiscal problems,” he said while answering questions following a speech. He said Beijing must pay more attention to fiscal reform. “Fiscal policy transparency is not good enough,” Mr. Zhou said. Mr. Zhou said China is willing to play a greater role in the international monetary order, saying that he hopes that a network of swap lines established in recent years to funnel Chinese currency to banks around the world will help sustain the global financial “safety net.”
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