According to The Wall Street Journal, an explosion in banks’ use of negotiable certificates of deposit, bond-like loans, is testing Beijing’s resolve to curb debt-fueled growth and investment booms. As authorities push up key short-term interest rates in their campaign to deflate asset bubbles swelled by borrowed money, the interest rates charged on these NCDs is rising so fast that it is starting to expose banks to the risk of investment losses and abrupt funding squeezes. Banks, mostly small or midsize ones, have been raising record sums via NCDs, selling 4.4 trillion yuan ($639 billion) worth this year, 65% more than in the same period of 2016. They use the proceeds to buy higher-yielding, longer-term assets like corporate bonds or investment products issued by fellow banks. “NCDs carry a lot of risk, and if not handled properly they could lead to a systemwide liquidity crisis,” said Liu Dongliang, senior analyst at China Merchants Bank.