Chinese media reported that recent central government actions to tighten credit supply to cool the overheating economy will affect foreign banksï¿½ renminbi-based business because the banks will be unable to obtain the currency from local banks to fund their local loans. The Shanghai Morning Post cited a foreign banker in China as saying that only two state banks were still supplying short-term loans to foreign banks on the mainland. Hampered by limited branch networks and business restrictions, foreign banks in China depend greatly on interbank lending to fund renminbi-based business growth. The report said that the foreign banks most likely to feel the effects of monetary tightening are those with insufficient deposits and high reliance on interbank lending.
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